On the latest episode of Recode Decode, Elevation Partners founding partner Roger McNamee spoke with Recode’s Kara Swisher about his new book, Zucked: Waking Up to the Facebook Catastrophe.
A former mentor to Facebook CEO Mark Zuckerberg who helped recruit COO Sheryl Sandberg to the company, McNamee said he reluctantly became a critic of the way big tech companies like Facebook and Google are abusing their users’ trust.
“You know, in advertising they say you are not the customer, you’re the product, but for Google and Facebook you are the fuel,” McNamee said. “And the problem is they gather all this data, not to improve your customer experience. Although they do a little of that, they really do it in order to create other products that may never even touch you, where you get no benefit at all. And importantly, they do this on the Silicon Valley model of shipping the product the minute it works without any consideration to the possibility there’ll be collateral damage.”
You can listen to Recode Decode wherever you get your podcasts, including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts, and Overcast.
Below, we’ve shared a lightly edited full transcript of Kara’s conversation with Roger.
Kara Swisher: Hi. I’m Kara Swisher, editor-at-large of Recode. You may know me as the bassist in the band Moonalice, but in my spare time I talk tech and you’re listening to Recode Decode from the Vox Media Podcast Network.
Today in the red chair is someone I know very, very well, I’ve known for a very long time, Roger McNamee, the founding partner of the venture capital firm Elevation Partners.
He was an early investor in Facebook before the company went public and is now speaking out against the company in a new book called Zucked: Waking Up to the Facebook Catastrophe. Roger, why is this a surprise that you are out there? I’ve known Roger for so long. He’s always been the most enthusiastic venture capitalist I know. He’s a character. Roger, welcome to Recode Decode.
Roger McNamee: It is so cool to be here, Kara.
I’m so excited. And this book is getting a lot of attention.
Well, it’s a funny thing. When you spend 34 years being a tech optimist, and all of a sudden you wake up one morning and you realize that everything you have done has basically gone off the rails, off the cliff.
So we can blame you, right?
Well, you know, I certainly blame myself and so I had this moment of epiphany where I realized I had to stop doing what I was doing and commit myself to seeing if I couldn’t help repair some of the damage.
All right. So we’re going to talk about the epiphany, we’re going to talk about what you were like, and we’ve talked a little bit of your history, but let’s get into your history because you and I go way back, but you go way back further than that. I got to Silicon Valley in the early mid ’90s. Talk a little bit about your background so people understand who you are and what you’ve done.
Yeah. So I first came to the tech industry in 1982. I grew up in Albany, New York. I had to drop out of college for a while. My father died. I had to earn some money coming back. When I came back, so I finished two years, my brother gave me a Speak and Spell, Christmas of 1978.
Going that far back, okay.
Speak and Spell is this Texas Instruments ... it really matters.
All right. Speak and Spell.
Yeah. It teaches kids how to spell.
I know what it is, Roger.
He said, “Because you can do this thing today, very soon you’re gonna be able to make a handheld device that holds all your personal information.”
This is your brother?
This is my brother, 19 years before the palm pilot, this is one year after the Apple Two. It’s still three years from the IBM PC, right? It is an astonishing insight. So I literally spend the next whatever number of years trying to figure out how to be part of this thing. I come to Silicon Valley in 1982 and they’re not doing anything like that. They’re still working on the Space Shuttle. That was a brand new program. We weren’t even making PCs yet. We were totally focused on the government.
Then the PC industry comes, it takes off. I wind up spending my entire life just living and breathing and totally believing in the Steve Jobs notion of bicycles for the mind, technology making the world a better place.
Had you been in Silicon Valley by this time? You had gone to college.
When I dropped out, I moved to San Francisco.
Right, dropped out of ...
I dropped out after my sophomore here and moved to San Francisco, spent two-and-a-half years there.
What made you drop out?
Well, I had a girlfriend, I chased her to California, and then my father died. And so I was stuck and I had to earn enough money to go back to school. And so it took me a while. The key thing was in the mid ’70s, that’s the era of Pong. We’re talking Apple got incorporated while I was in California, but I wasn’t aware of it until the last year when the Apple Two shipped.
It’s all of a sudden I’m looking at this thing going, wow, what are you going to use that for? Right? It wasn’t obvious to me at all. I’m not a natural engineer. But the Speak and Spell changed everything that same year and all of a sudden I go, okay, now I get it.
Right. So you moved to California and what did you do? Where did you work?
I lived in San Francisco and I thought I was going to be a journalist. I’d been this hotshot on the school newspaper. I come out, I call the San Francisco Chronicle, I say, “Hey, I’m here. I want to be a reporter,” and the guy literally bursts out laughing and says, “Look kid, you’re a college dropout with no degree. We do have jobs selling classified ads south of Market,” which in those days was a free ...
And is again, let me just say. But move along.
Okay. So then I make a call to the community newspaper that’s sort of the mid-size thing, the Bay Guardian. The guy laughed at me and says, “We have a job selling display ads south of Market.” I’m starting to connect the dots. Finally I realize the only jobs in newspapers are going to be selling. I did not have a selling personality. I had no idea. I was very introverted then.
And I finally went to work for a French-language newspaper because I lived in France and so I was fluent. I went to work for them and I was the entire ad department. It was my first entrepreneurial experience with a staff of three, and I had to learn not only how to sell ads, I had to learn how to trust people because I also had to collect the money.
Why didn’t you just go to the English ads place? Why didn’t you just go back to south of Market and get those?
Because I was too introverted to work in a large organization. The notion of being a salesperson in a rah rah ... You know me well enough to know that if ...
You’re a little rah-rah, but go ahead.
No, I’m not guy rah-rah.
Yeah, you’re right. Yeah, that’s a fair point. Guy rah-rah.
One time, I was your favorite male lesbian for a while until Marc Benioff showed up and displaced me.
He did, it’s true.
So anyway, I just couldn’t do that. I worked in this from where I was the only guy. Everybody else was women and it worked perfectly. And I earned enough money to go back to college. But the key thing is I took all these engineering courses, but I just couldn’t figure out how to make even a really large thing to collect all your data. So I decided I need to find a job where I can be around it. And when I went to grad school, I figured out, oh my God, they’ll pay me to be a research analyst. I got to go do that.
And in those days, that was like an academic job. It didn’t pay well, there was no chance of becoming wealthy. But I go to T. Rowe Price, I get there the first day of the bull market in 1982, and they assign me to tech. And you sit there and realize, wow, for the next 34 years I had this galeforce tailwind. You can explain every good thing that ever happened to me based on that starting condition of that day in that coverage group.
What was the company you were covering?
At the beginning, the very first ones because it was ’82, I covered defense electronics and software. And software in those days was computer associates and MSA and I don’t think there was anything else. PCs were still in the future.
Not IBM? Not Apple?
No. Apple was, there was somebody who covered hardware. Hardware was its own category. T. Rowe Price had a big tech group, and so I had software and the defense electronics and the space program. I was so badly prepared for that job.
So you went in and you did research reports on all these stocks.
I did research reports in a bull market, which meant everything recommended went up. So if you ever were cautious, that was a mistake. And the key inflection point occurred in, I believe it was ’87. I went to a conference and I was trying to figure out how to do this PC thing. And these guys were unloading amplifiers and guitars from the back of a car and it turned out they were having a jam session.
They invited me to go along — I had been playing at happy hours forever. I knew hundreds of songs and everybody else knew one verse or one chorus, but nobody knew a whole song. So I was welcomed in and that meant that I suddenly was playing music with Paul Allen from Microsoft, and Felipe Con from Borland, and the chief technology officer at Apple, and all these other big mucky-mucks in the industry. And suddenly I’m part of the social structure completely by accident.
Which is very important.
Yeah, because these guys didn’t go to bars. They didn’t go and do weird stuff. They had jam sessions and that was something I knew how to do. One thing led to another and I evolved this notion where I just followed the industry around, which in those days, anyone else sat in an office with a computer and a spreadsheet and read faxes. And it’s like I’m going, “Nah, I’m not going to do that.”
My wife was a professor in Philadelphia. My job was in Baltimore. I figure if I’m not going to be home at night, I might as well be traveling. And my boss, bless his heart, said, “You go for it.” And so I did and created this model that worked for me and it really worked for the PC industry.
So you’re here being an analyst at T. Rowe Price. How did you move to investment?
So what happened is the natural progression, you’re an analyst and then if they think you’ve got potential, they let you run some money. In ’85, they let me be in charge of the technology portion of the biggest emerging growth fund that they had.
The New Horizons Fund. And the key thing was there were no tech funds until, I want to say ’86 or ’87. So it was the biggest pool of tech money out there. And I had one insight. I decided I wasn’t going to own anything that had been founded before Apple. Nothing before Apple. I was only going to own the microprocessor generation company.
I see. You wanted all the fresh, young ...
I wanted fresh. So it meant I basically sold all the old guard guys. Well, if you pick only one decision in the ’80s, being negative on mainframes and minicomputers basically gave you huge relative advantage in an industry where relative advantage was the only thing you cared about. And so I got really, really lucky. I probably made three great decisions at T. Rowe Price and the net result was I finished the ’80s.
They created a science and technology fund in ’87. It starts the first of October of 1987. The crash happens 19 days later. I’m not managing the fund, but it’s down 31 percent after one month and it’s like the firm’s going, “Oh my God, we just put our two best guys in this thing. We’ve doomed them.” Six months later they moved them out and they said, “Roger, you’re going to run it.” And I said, “Only if I get to run it my way.” And they said, “What’s your way?” And I said, “I don’t know, but it won’t be your way.”
And so the fund was this tiny little thing. They figured it was doomed.
I think 10 million bucks in assets.
That was a lot then.
Well, not really.
Well still, it’s a small ...
10 was not, it wasn’t ever going to break even at that level. And so I took over the fund and I basically decided to concentrate. I would have 50, 60 percent of the fund in 10 holdings. There were some really scary moments, like 1990 when the Kuwait invasion happened simultaneously with Oracle missing.
Oracle had been growing 100 percent year over year forever. In the summer of ’90, it finally failed. I had 12 percent of the fund in Oracle. The stock was down 30 some-odd percent on one day. Chips and technologies got blown up with the ... I had three positions that were each 10 percent or more...
What did you do?
Well, the fund was down I want to say 35 or 40 percent in a month. And it was like I had my own personal crash. And what was amazing, though, was that I realized that the Kuwait thing didn’t matter because Windows had come out in May and that Windows was going to be the first time tech had a bull market. It went through the ’80s lagging terribly because the big guys were all getting killed. But I said, “Microsoft is changing everything. I’m gonna load up.”
I’m going to just get rid of the things that had killed me and pile into Microsoft and things like that. Long story short, between September of 1990 and the end of March of ’91, so for six months the fund was up over 100 percent.
Right, because you made ...
And all of a sudden, having had great years before that, I suddenly had the top fund of any kind, at which point I’m going, “This is really cool.”
Betting on Microsoft.
Well, actually it wasn’t Microsoft. I was betting on everybody but Microsoft for a weird reason. But anyway, long story short, in parallel, I’d been doing venture investors. T. Rowe started as a late-stage fund, so I had put money into Electronic Arts and Sybase and Radius and a few other things, but they were all Kleiner Perkins companies. And I got to know John Doerr in the fall of 1990 right at the bottom of that.
Because most of the funding of tech had come from venture capital, most of the big funding, besides the IPOs.
And there weren’t that many companies, as you remember. There’d be maybe 10.
I remember when I showed up — yeah.
There’d be like 10 IPOs a year, one of which would become a monster company.
Right. It was ’94 right?
But John was the hot young guy. He’d done Compaq, he’d done Lotus, he’d done Sun Microsystems. And we hit it off. Anyway, long story short, in fall of 1990, one of their partners, one of their investors said, “You guys ought to start a crossover fund. You ought to get that guy McNamee to run it.” So he comes up to me at Comdex, which is the big trade show.
Which was the big trade show.
And Sheldon Adelson, the casino magnate, owned it.
Yes, that’s how he made his evil ...
It’s how he made his first money. John comes up to me, he says, “One of our investors wants us to do this. What do you think?” And I said, “When do we start?” I actually was working on a business plan to do exactly that with him. What I didn’t realize was he had never given even one second of thought except for this one conversation. So he leaves the thing and doesn’t think about it again. Meanwhile, that night I stay up all night long finishing the plan, which I send him the next day. Nothing happens.
But anyway, a series of miracles occurs and I wind up persuading Kleiner Perkins that I have this idea. And they run it through a wringer because we’re going to create a fund inside Kleiner Perkins, the first time they’ve ever had a subsidiary. And we called it Integral Capital Partners. And I brought a guy who was my partner at T. Rowe, John Powell.
I remember him.
We decided to raise the money from the only people in America who thought tech was a good place to invest, which are basically the CEOs of the tech industry. And so we had this little vertically integrated thing, but it created this real weirdness because you basically couldn’t own any of the portfolio stocks of those people. So a ton of money from Microsoft and Intel and all these other things. And you’re trying to invest in a tech fund without owning those stocks. But it worked out incredibly well. The timing ...
So you were at Kleiner.
Yeah, but imagine getting to Kleiner in 1990. You’re there for the entire ’90s, which means ...
I was there when Marc came in. I actually got to be in the meeting when Andreessen brought in Netscape. I was there when Jeff Bezos brought in and got to sit in on the first Amazon meeting.
What did you think?
So with Netscape, Bill Joy had been talking up that whole thing. And so we all were true believers. Nobody knew what that meant, but Bill had convinced us this was the next big thing. And so that part we were onto. Bezos, he himself was the story. You look at books and people had been trying similar things using Ingram as a buffer.
Ingram? Oh god, the distributor. Yeah.
And it hadn’t really worked, but Jeff Bezos was arguably the most compelling entrepreneur I have ever seen.
He is and remains.
And he’s really unlike ... There are a lot of great entrepreneurs and there are a lot of brilliant people.
He was exhausting. I don’t know how else to put it. He would exhaust me when I visited Seattle.
But he was also funny, okay?
Yeah, in a way that the other guys just plain weren’t.
No, they weren’t.
He was very different character.
So he had a lot of enthusiasm in a way that ...
Yeah, he was just one of a kind, right?
So going through all that period, being inside Kleiner, we get to ’97 and Martha Stewart brings Martha Stewart Living into the company.
Well, it wasn’t yet Omnimedia. That they stuck on the end. It was basically a home decorating company. Martha comes in and she’s a total tour de force. John says, “We’re going to slap the Kleiner name, we’re going to call it Omnimedia, and we’re going to take it public in a couple months,” and they got a multibillion-dollar valuation for a home decorating company. I’m going, “Oh my God.”
But it was Omnimedia, Roger.
Yes. It’s the end of ’97 and I’m going, “Oh my God, we’re in a bubble. When this ends, Integral is toast.” So I go to Kleiner and go, “When this ends, Integral’s toast,” and they look at me and go, “What do you mean end? This is never going to end. This is the beginning of everything.” So I go to our other partner, which was Morgan Stanley, which owned a small piece of Integral and go, “Guys, this is the end.” And they looked at me and went, “Really?” And I go, “Yeah.”
And they said, “Okay, here’s some money. Go figure out what the next big thing is.” So I went out and we spent two years and came up with this thing called Silver Lake. And the idea was to go into older tech companies and give them all the benefits of a startup. The problem with the old guys is they stopped growing, then the stock stops going up.
So you’re trying to give them insights, yeah.
And all the people leave and then you go into this progressive cycle of decline. And I wanted to do it with Seagate because the disk drive industry had been going through this hot and cold cycle up and down.
Oh that’s right, you were in Seagate.
And so we wanted to do Seagate and we wanted to do the motherboard business of Intel. Those were the two examples we gave investors.
So you’re going to go in and save, invest, cut costs.
No, the opposite of cutting costs.
Right, put money in.
We were the opposite of a traditional LBO fund. We were actually going to increase R&D dramatically and try to change the slope of the long-term cycle. Well, Steve Luczo, who at that time was the president of Seagate, was completely into this idea. And he’d worked in investment banking and he and I had known each other before we went into disk drives.
So I would go to the Integral investors in the fall of 1998. And I go, “We think the cycle’s coming to an end. We think you ought to do this.” And they sign up for a billion dollars of this new fund sight unseen. And I got to go out and find other people to work with. I have one guy and we’d go and get two more and wind up raising, I don’t know, two-and-a-half billion dollars, which at the time was ludicrous.
It was a lot, I remember.
It was so far the biggest fund ever.
Was this Elevation?
This was called Silver Lake.
That’s right, which is huge now.
We basically take in the money and I cash out the rest of the Integral fund in March of 2000, which turned out coincidentally to be the end of the cycle.
Again, just dumb luck. And we put the money in Seagate and this company called Daytech which was an online trading business, now known as Ameritrade or TD Ameritrade, and Gartner Group. And we do them all in 2000 right as the market is in free fall. And of course all three of them were magnificently successful. Seagate totally changed the disk drive business and our investors, as a consequence, wind up going up while the market was collapsing. And that made people very popular. But then I had a health crisis and I missed ...
You and I had the same health crisis, right?
Well, mine was a little bit more severe than yours because I had two scarring strokes and a TIA in my brain stem. Then I had to have open-heart surgery in order to keep from having more strokes.
So the problem with all of that was that I missed more than six months. While I was gone, my partners realized, “Hey, wait a minute, we’ve got these three amazing investments. We’ve already got all the money. We don’t need this guy anymore.” I was really different. I got to be honest with you, I don’t play office politics well.
No, you don’t.
And I wasn’t, well ... Let’s face it, I’m not a deal guy. I’m really idealistic and I’m not motivated by money. Anyway, I come back and I talked to Steve Jobs and go, “Steve, you’ve just introduced this great new thing called the iPod.” And he goes, “Yeah?” I go, “But your stock is at $12. You’ve got $12 in cash and your options are at 40. That’s not going to work.” Steve goes, “Yeah, but I don’t want to do an LBO. Plus, I don’t like your partners.”
I go, “Steve, come on. We’ve gotta find a way to do this.” Anyway, he thinks back, comes back and says, “Why don’t you buy 18 percent of the company in the public market and we’ll do this thing? You go on the board and we’ll do it.” So I come into Silver Lake, we work for two months, come up with a plan that says that Apple is going to focus on consumers, it’s going to do iPods and it’s going to do iMacs and then they’ll do other things for the digital life.
But it’s going to create a new world for PCs, one that’s away from the office towards consumers and it probably grows 12, 14 percent and it’ll gain some market share and everybody will be happy and we’ll make a ton of money. The Apple guys will do great things. My partner said no. They said you can’t make any assumption of growth for any period greater than 7 percent.
And I’m looking at him going, “Hang on. The company has as much cash on the balance sheet as stock price. You’re taking no risk. And 7 percent still works. The math at 7 percent says this is a great investment. Why wouldn’t you do it?” We’re not gonna do it. It cost our investors an opportunity at over $100 billion in profits. That was a little frustrating.
Then Bono calls up. I literally get a phone call.
Bono shows up! Wait a second. Okay, I’m teasing.
So I knew Bono because ...
I’m gonna hurry you up. So you get to Elevate.
Anyway, Bono calls up one day, says, “Roger, I got a deal for you.” And we take it to Silver Lake and they go, “We’ll do the deal, but we’re going to do it with Bono but not with you.” And I go, “What do you mean?” They said, “We want you out of here.” I go, “Oh, that’s cool.”
What did you do to them, Roger?
Wow, that’s a good question.
I guess you’re irritating.
I think I’m just annoying. Obviously, I was annoying.
But anyway, long story short, I call up Bono say, “Wow, I’m out of the firm.” He said, “Screw them, we’ll start our own firm.” And so that day, Elevation started and then that is what leads to ...
I recall writing about this. I’m now remembering when I had to write about this fight. It was so inane.
Yeah, yeah, yeah. And we’d been through a little bit, all the way back to you at the Washington Post. So anyway, that leads us to ...
I think I was at the Journal by this time, but yeah.
By then it was, but you and I first met earlier than that. So anyway, the long story short is that’s 2003 and that’s Elevation. The following year, Mark Zuckerberg starts Facebook.
So tell me how you met him. And you were doing Palm, too. You weren’t doing ...
Not quite yet. Palm comes slightly afterwards.
Imagine that it’s the spring of 2006. I get an email, maybe early something, I get an email from Chris Kelly, who was the chief privacy officer at Facebook. I knew Chris just a little bit and he goes, “My boss has got a really serious problem. He needs to talk to somebody who’s been around a long time who’s objective, basically a dinosaur.” I go, “Well, that sounds like me.” He goes, “That’s why I’m calling.”
So what are you thinking? Next week, week after? He says, “No, how about 1:00 this afternoon?” So Mark comes to my office. He’s 22, company’s two years old. They have 9 million in sales, no real business model. They’re only still high school students and college students. They don’t even have News Feed, but it’s already obvious that he has the answer for social.
And to me, there were two elements. One was authenticated identity. You had to have an email address from a real thing. The second thing was he actually gave you privacy control because all there was in those days was what you put into it and you could control who saw it. And I thought that Myspace and Friendster and all these other things had failed because of a combination of anonymity, which both allows trolls to come in and also make sure network complexity a lot harder.
And frankly, just a lack of focus. Mark comes into my office and I go, “Dude, you and I don’t know each other. If you go first, you’ll never trust anything I say, so let me tell you the context for me coming to this meeting.” He goes, “Fire away.” I go, “If it hasn’t already happened, either Microsoft or Yahoo is going to offer a billion dollars for Facebook and everybody you know is going to tell you to take it.
”They’re going to tell you they’ll back your next company, it will be just as successful. You’ll have $650 million bucks, you can change the world. And I just want you to know, Mark, I think what you have here is the most important company since Google and you will eventually be bigger than Google is today.” In my mind, that would have been 100 million users and I’m thinking that’s outrageously big.
And I said, “Here’s one thing I know.” I’ve been doing this at that point 24 years. There’s never been an entrepreneur who’s had the perfect idea at the perfect time twice. Lots of people have had the perfect idea twice, Steve Jobs being an example, but getting the timing exactly right, that takes unbelievable good luck and it’s never happened twice. I said, “It won’t happen to you. I think Facebook is the single best idea of this decade. If you believe in it, you got to do it.”
So here you are, meeting young Mark Zuckerberg. You’re totally into this company. You’re telling him what he wants to hear, which is don’t sell to Terry Semel. Don’t sell to Larry and Sergey. Keep at it, which is precisely what someone like Mark Zuckerberg wants to hear.
And what he said to me at the time was, I asked him, “Do you want to sell the company.” He said, “I don’t want to disappoint everybody. And I said, “Dude, wrong ...”
That’s so like him.
That’s the wrong frame. Well, I think his parents and all were involved. And really, a billion dollars on a $9 million revenue thing was, in those days, subsequently that became small change.
And he had a lot of troubles. He had a lot of COO’ in and out. He had a lot of CFOs. Every week there was some catastrophe.
Some catastrophe. And so ...
Was Microsoft in by now?
No. No. No. This is the first one. But within six months I think he has at least two more offers. Including a second one from Yahoo.
So the key thing was, I helped him understand how to communicate why he wasn’t going to do it, because he had a golden vote. The entire meeting was only a half an hour. But he invited me to come back to his office, like a couple of days later, and that begins a three-year period of what I would characterize as mentoring, what others have characterized as mentoring, where I was part of this ecosystem of people he would talk to.
So you, Graham ...
Well, the top people. I was in the second tier. The top people would have been Peter Thiel. Would have been Marc Andreessen and Don Graham.
Washington Post. Just to be clear. Marc Andreessen was the founder of Netscape and became a venture capitalist.
And Peter Thiel was Peter Thiel who was the first money into Facebook. Those people had social relationships as well as business. For me, it was just a business thing. And he consulted me on a very specific set of things.
But what was weird, at that time, those things were coming up ... not every day but certainly every week. So we were talking a lot. I was at Facebook almost every week for a few years.
And you had been an investor at this point?
No. No. No. At the beginning, I did it just because I wanted to meet the kid who was starting the thing I thought was the coolest idea since Google.
Elbow your way in, like most venture capitalist.
No. No. If I had, I would still be at Silver Lake.
Right, that’s true.
So what happens is that I help him deal with replacing a bunch of people. I help him deal with the Winklevi. He has that whole crisis of that story breaking. And what happens is in the summer of 2007, one of their employees has a life-changing experience and needs to get liquidity. Needs to get rid of his options. It’s not even ... they aren’t even real options. It’s this totally synthetic thing and he needs to do a transaction. He needs to do it quickly. And he comes to me and says, “Will you do it?”
And my partners looked at it and said, “Look, we can’t put a thing that’s that touchy-feely into the fund. But why don’t you go ahead and do it?” So Bono, Marc Bodnick and I bought this guy’s options.
And Marc Bodnick is the brother in law.
Marc Bodnick is the brother in law of Sheryl Sandberg, and the way that I got to know Sandberg back in 2000 which is ... Sheryl is the person who introduced Bodo to me. All of these things are incredibly incestuous.
Right, Bodo was always in her basement, for some reason.
Wait, hold on. Bodo was working on the millennium debt forgiveness program. Sheryl was the US counterpart. And he wanted to find out who this guy was who was helping The Grateful Dead with their digital strategy after Jerry Garcia died and that person happened to be me. And Sheryl laughs because she goes, “My brother-in-law works for him.” And so, I mean, this whole thing.
It’s such a tight ... I want you to say this because it’s such a ridiculously tight social and weird connection.
And this book is written from the perspective of Jimmy Stewart in Rear Window, right? It’s one series of improbable coincidences after another.
So you go, you start working with him, and then you buy this stock out.
We buy this little bit of stock, right? Then almost immediately after, Sheryl calls me up and says, “I am thinking of leaving Google. I’ve got an opportunity to get a senior position at the Washington Post.” And I go, “Sheryl, that is insane, okay, Google is killing these guys.”
Meanwhile, Mark has come to me and saying I’ve got to get a different COO. And a light bulb goes off and I say to Sheryl, “I think you should look at Facebook.” And Sheryl goes, “Oh come on now. He’s 22. This will never work.”
And Google had become a juggernaut at this point and she was in charge of a critical part of its advertising business.
She was part of a three-woman team that had created the monetization at Google, and AdWords I think is arguably the greatest advertising product ever created.
What’s her name? Shona? Shoana?
No. No. No. It was Marisa and Susan.
Susan. Susan. Okay, I thought Shoana was involved too. But go ahead.
My point is it was the all women’s team. Okay. And they created ... I mean every ... the great thing about AdWords is that it worked for everyone. There was nothing too deceitful about it.
So she was in a big place. And her thought about this was?
Well, her initial thought was he’s so much younger and his reputation was The Winklevii, right? And so where are you going to do that? And I said to her, “Sheryl, humor me. His mother is a doctor. He has nothing but sisters. I think he is the rare person in Silicon Valley who can work with a woman. Just take the meeting.” I go to Mark, I say, “I think you should get Sheryl as your COO.”
Mark says, “Well, but she’s at Google, it’s a totally different problem.” I’m going, “Mark, give me a thing that’s closer to what Facebook is going to be than Google.” I said, “And they went from zero to look where they are? This has got to be relevant.”
So anyway, it takes like two months but they finally get together. And once they do, there is a chemistry. And it really comes together.
They team up. At which point, then you have later that year in 2008, then you’ve got Beacon. Beacon was this product that Facebook created that basically followed you when you purchased stuff at retail.
Then they would post on your Facebook account and it was this famous story of a poor man who buys an engagement ring.
The ring. I wrote about it.
On Overstock, at a really deep discount, and Facebook publishes it on his News Feed. That is how his fiancee finds out he is going to propose. Finds out he gets this ring for 27 cents. All of his friends find out. He’s humiliated. And anyway, Facebook withdrew that after a matter of months, and Sheryl and I had, shall we say, a disagreement philosophically about that. And I realized it was time for me to back off a little bit.
Right. Let’s be clear, Roger. You can be irritating — you know what I mean? — to people. You kind of say what you think.
For sure. No, no.
And they don’t like that in Silicon Valley. Once they get to a certain period, you have an opinion. You have an opinion.
It’s the same problem we had at Silver Lake. I mean, I’m basically ... there’s a certain amount of time you like me and then after that, you know, I wear out my welcome.
I still like you, Roger. But still. You’re irritating. You can be irritating. But you are very, you have occasionally written me emails, I’m like “that asshole” kind of thing.
But you had been there for that time, what was your conception of Facebook at the time? This was the greatest thing in the world. This was going to be great.
Did you see any of the seeds of this? And you were made wealthy by it.
So Beacon was for me, Beacon changed my whole attitude, and I don’t describe it this way in the book because it’s a level of detail too far, but for this audience, it’s just .. Beacon affected my relationship with Sheryl. And you know, I do describe what she says about it. She talks about being a team and succeeding and failing as a team, which is a philosophy that she holds very deeply and it worked incredibly well on the way up at Facebook.
My point to her was that I feared that whenever something went wrong, if you didn’t have any accountability at all, when things went seriously wrong there would be no way to hold people accountable. No way to stop a problem. Nobody would speak up. There would be no incentive. Anyway, I realized it was time for me to step back. I did. I’d go into the stands and I’m a cheerleader and I love everything.
The next signal was Eli Pariser, who was at that time the president of Move On, does a TED talk about filter bubbles and he talks about the fact that his Facebook and Google feeds are no longer neutral and that these algorithms are tailoring to what they perceive he likes and they are trying to steer him in a direction ...
That was an important speech.
And he warned all of us. And I was gobsmacked. I literally ran up to meet him after the thing. The problem with this whole thing was I just assumed that once he called attention to it, Mark would look at it and go, “I don’t want to do that.” You’re laughing, but here’s the thing.
You know Mark. You do. Come on.
My relationship with Mark, he was so high integrity and so high quality. I mean, I don’t know that anybody has ever had a better relationship with him than me because I didn’t go watch The Social Network in part because the Mark I knew was different from that, and I just said to myself ...
Oh it wasn’t like him at all. First of all he talked too much. The guy in the movie talked a lot.
But all I meant was he’d grown up in my mind.
Yes. But there was worrisome schedules throughout the founding of the company. There was always this sneaky data-sucking mentality from him.
Hold on. You’re completely right. I’m just saying, I had a lot of personal interaction with him. I had dozens and dozens of meetings.
He was fantastic with me.
He only asked me about things where he was prepared to take my advice, and so it was from a mentoring point of view, it literally couldn’t have been better.
He seeks advice. I’ve had that experience and so have lots of people.
And my experience with Sheryl, other than the Beacon thing, was also flawless. I loved them both. They were really ... I really liked them. So I was a cheerleader.
So in 2016, when I start to see things that aren’t right ...
What caused you? What was the epiphany like you talked about?
So the key thing is, it was a series of things that happened. It started with the New Hampshire primary where there were these Facebook groups, ostensibly associated with the campaign of Bernie Sanders. It would be like Bay Area for Bernie. And Burners for Bernie. And things like that. They would have these deeply misogynistic, basically counterfactual memes about Hillary Clinton. The thing that caught my eye was that it went from one meme shared by one person, one day, then the next day a different meme shared by four people. The next day a different meme shared by 16 people.
Which told — because I had done Facebook groups for Moonalice, my band — that somebody was paying money to get people into the groups. I’m going, I went and looked at the groups, the only thing they were doing were these memes. What’s going on here?
Then a month later, Facebook expels a company that was scraping data. Basically using the API to scrape data about people who are interested in Black Lives Matter. And they were selling it to police departments. I’m going ... now they expelled it, right? But the problem was the damage was completely done. These people’s civil rights had been trampled upon. I’m going, “Oh that is evil.” And they are using the ad tools.
Then Brexit happens. The United Kingdom votes to leave the European Union. There was an 8-point swing between the final-day polling and the outcome in favor of leave, and leave had been all over Facebook. Remain had not. Leave had this incredibly incendiary ad campaign. I’m thinking to myself, “What if there is something about the algorithm that is giving it an advantage here?” And keep in mind, I left in 2009.
Chris Riley just wrote about that today.
They don’t really do ... the beginning of all of the stuff that’s kind of creepy and psychological really begins in 2011. So I missed all that. So I’m not prepared.
Had you not paid attention when they did all the partnerships? Remember ... I think it was in 2008 or ’09? He had that one F8. I was creeped out right then. I was like, “What?”
So, I went there and I missed the signal. I was there with you and I looked at it and I’m going ... I wasn’t sure what they meant. Okay? And what should have thrown me off was that the scale of the people that he was doing it with was too big unless he was giving something really magical.
I mean how in god’s name would you get Microsoft and all these other people into partnerships unless you were giving them the magic beans? I wanted to believe, right? I liked him. So it is what it was.
Well, everybody was along for the ride. You had Yuri Milner coming in with the money. You had the public offering and Microsoft.
Well, Yuri Milner scared the hell out of me. So that’s another signal that I noted but didn’t know how to factor in. By the way, I knew nothing.
This was a Russian investor.
I’m just saying, “Huh, this is weird.” It was just that this is weird as opposed to anything else. Anyway, the fourth and final point was that the housing and urban development cited Facebook for advertising tools that allowed discrimination in real estate in violation of the Fair Housing Act. So now I’ve got four data points and I had a bunch of other slightly lesser ones.
And I come to you guys, and Walt invites me to write a Recode op-ed about my concerns. I start writing it up and I’m unfortunately really passionate because two of the three things are civil rights violations. Or two of the four are civil rights violations. I grew up in a family where my parents were really involved in that stuff, so I take it ... the thing I’m involved in is violating people’s civil rights, that was like ... that was bad territory. So this was an op-ed.
It was kind of emotional. And my wife Ann says, “You really have to send it to Mark and Sheryl first, because that’s got to be your first loyalty,” and I didn’t want to make trouble. What I wanted to do was solve the problem.
So I never publish. I never give you guys the op-ed. I just give it to them.
And they got right back to me. In fact, they were incredibly polite, but also a little bit dismissive saying we just agree that it’s systemic. But here’s Dan Rhodes. You talk to Dan. He’s your friend.
He’s the partnership guy.
He was the partnership guy and I was close to him. I knew him well and that was a good solution. I said, “Look, I’ll talk to Dan.” We talk a couple times on the phone, then the election happens and I’m like ...
Just a second here.
At that point ...
Why did you get assuaged by it?
You’re talking about in 2016?
Yes, in 2016.
Oh no, I wasn’t. Hold on. I go completely nonlinear. So there’s only nine days that pass between the memo and the election, at which point I’m saying, “Dan, you don’t get it. You’re telling me that the law provides a safe harbor for the action of third parties and I’m telling you you’re in a trust business. You have got to throw yourself on the mercy of the court. You have to do what Johnson and Johnson did after Tylenol. You have got to protect the people that use your system.”
They didn’t want to. I wrote lots of texts to all of them and they dismissed ... They were dismissive, I would say.
He dismissed absolutely everything.
He was particularly dismissive.
I go on for ... well, I also think that was his job, okay? I believe he was given marching orders with me and presumably with you and he followed them.
We got into a big fight, a public fight, but go ahead.
So we spent three months in this back and forth. I finally give up. And I start looking for allies. And then a miracle occurs in April and I meet Tristan Harris right after he does the 60 Minutes piece. He had been a design ethicist at Google, and he was on 60 Minutes talking about what he called brain hacking and he was an expert at persuasive technology and he talked about how platforms, because of the instantaneous ...
There was a second part. The addiction part. I had done a podcast with him the year before because it was so fascinating.
But I missed the podcast.
It was an idea that these things are not good for you, the first rumblings of that.
The point was, he came at a moment in time when I was looking for an ally. I learned that, okay, these people can use the tricks from magic, from slot machines, the sort of reward thing, but also appeals to fear.
Push that button.
Fear and outrage. Move your buttons and therefore manipulate your attention, and in manipulating their attention they can create first habits — you know, with “Like” buttons and notifications — and then they create addiction in some subset of the population. I call him up and I go, “Dude, have you thought about this in the context of the election?” He goes, “Say more.” We talk about it and we go, “Oh my god.” He has one part of the problem. I have another part of the problem. We decide to join forces.
And after that, you know, we got to the TED conference where he gets ... Eli Pariser gets him on the agenda on two weeks notice. He gives this impassioned TED talk in which everybody gives him nice applause afterwards. We go around to collect cards from people who want to help us out, we get two cards, neither one returns a phone call. It’s a complete wipe-out and we don’t know anybody else. After that is when miracles occurred and we finally get to Congress, get to Senator Mark Warner.
I want to get to a couple things. One, you had made ... would you say how much money you made from Facebook? Did you want to give it back? A lot of people wonder. Like Facebook people, like he took all the money and he’s being a critic.
Well, to be clear, I’ve given away most of the money that I’ve made from Facebook and well before I understood this problem. Give it back to whom was an interesting question.
They were like, “He made money from us.” It’s like a cigarette guy.
I think the reality is ... that’s an interesting question, but I don’t know how that would work operationally. I think I had two choices. I could sit back like everybody else and do nothing.
Right. Which most people did. Take the money and be quiet.
Or I could become an activist and take money I’d made from Facebook, fighting them. Right?
Well, it’s happened. Cigarette manufacturers’ families are the ones fighting RJ Reynolds. There are all kinds of examples of that.
Okay. But my point is, those were the two basic choices I was offered. And, people say, “Well, why do you still own the stock?” I still own the stock because I didn’t want anybody to be confused, I don’t want them thinking that I am an activist because I’m trying to knock the stock down, right?
Look, I was obviously the wrong messenger for Mark and Sheryl. And I may be the wrong messenger for the people that are saying this. But everybody needs to address the message. We need to talk about it now because with the Internet of Things and with artificial intelligence, the problems we’re talking about are about to get so much worse.
Right. I want to talk about that in the next section.
I’m just saying. That’s why I became an activist.
Right. So when you say activist, what prompted you? Let me be clear to listeners who don’t understand Silicon Valley: It is a tight club and you put a stink bomb right in the middle of it.
Oh you bet.
They attack you personally. “Roger is crazy.” “Roger is nuts.”
“Roger is a drug addict.” “Roger is a ...”
“Roger had a stroke.” Well, someone said that to me, and I was like, “Hey, I had a stroke.” So really not ... stroke is not the way I want to hear that kind of thing.
But it was an astonishing ... very few people break away of prominence and you had long been a person of prominence and they were trying to for sure sideline you, but not in the typical way you would think whistleblowers are, but more in the “he’s crazy” kind of thing.
They obviously, you talked about before ...
Everybody does it. It’s not just ...
But no, I had an unusual personality for what I do all the way through.
That’s been both the secret of my success and always the source of the setbacks. And, you know, the point is I can’t worry about the issues that you’re describing there. I believe it’s really important that we talk about these issues. I have a biography that makes me credible in some of the most important circles of doing it. And the cost is very high. I’ve lost a huge number of relationships that really matter in Silicon Valley but I also realized that I was at a point in my life where I needed to stop letting technology intermediate everything.
But why did you do it? What was it? You were a political person? They ruined the election. What was it when you were like, “No”?
No, what I’m saying is it actually didn’t happen all at once. I mean, reaching out to Mark and Sheryl was me reaching out to my friends thinking that they were the victim. And my basic belief is that I understand how 2016 happened. I mean, were there signals? Yeah. Did they miss them? Yeah. But in fairness, I missed a ton of signals too, so I think we’re all fallible. We’re all entitled to make mistakes.
My real problem here — and the thing that really energized my activism — was initially I go to Congress. We help them get ready for the hearings. We think our job is done because our goal, just on me, is to just get a conversation started. The people in Washington said, “No, no, no, no. This is just the beginning. We need you guys to keep going out there.”
And then when the Chamath Palihapitiya incident happened ... Chamath had been in charge of growth at Facebook. He gave a speech at Stanford in which he regretted his thing. It gets published and within three days he doesn’t just recant it, he goes out on the road and starts shilling for Facebook. And that was when I knew, oh my god. They aren’t even going to turn around with evidence. That is what motivated me to become an activist.
Right. And it’s Chamath, too, who is very outspoken.
And he’s a poker player.
I’ll be asking him about that.
Yeah, he’s a poker player. He’s not a shrinking violet, right? He’s a very strong personality. So I look at all the things and I go ... I never intended to become an activist. And now it’s simply a matter of ... if you remember The Three Stooges movie? They are all in a line, they are looking for a volunteer and everyone takes a step back except one guy. Well, I’m the one guy.
And my point here is, look, I am not the perfect messenger for this stuff. Duh. That’s obvious. I stipulate that. I am going to do my best and not every audience is going to like it but I do have a resume and some skills that I can use here. As long as those are working with somebody, I’m going to keep doing it. But as soon as the opportunity of retreat comes, I’m going back to playing music.
Right, okay. So I want to get ... in the next section I talk about solutions and what you think has to happen. But has it cost, you said it’s cost you relationships. Has it changed your entire way of ... has it removed you from the Silicon Valley environment? You’re like a leper kind of thing.
No, no. It’s not quite that bad. What I would say is it has changed the nature of my interactions. I was pulling back already and so there was a whole set of new younger companies I was not plugged into. That largely was a cultural thing. I started to notice with Zynga and then with Spotify and then with Uber, that Silicon Valley’s best stories were companies whose philosophy and value system was not ones that I was comfortable with. So I passed on those three deals at very attractive times.
And my point is, other people can make that investment. That’s great. But for me that didn’t work, and I realized I couldn’t manage other people’s money if I wasn’t willing to invest in the best thing.
To do anything. Yeah. Yeah.
So I decided that was it for me. I decided I wasn’t going to be an active investor anymore.
So you had no cost?
So in that sense there was no cost. But it was regretful, right? And so the way I would look at it is what’s happened here, as I stopped allowing technology to mediate my life. I’ve reengaged face to face with people. I’ve seen more of you in the last six months than the prior five years put together, and that’s true of a lot of people in my life.
It’s really funny because I’m reengaging with the people I love, with the people I respect most. Many of them are my age. Some are younger. Some are older. But it’s been really fun to reengage. So it’s not like ... I mean, there are some relationships that don’t work anymore and that make me really sad. I haven’t talked to anybody at Kleiner in ages, and that really bums me out because I loved being part of that.
Yeah, that’s all right. They’re jerks. I’m kidding. I’m kidding. What do you hope to do with this book? So you write this book. You worked with Congress. You’ve worked with European authorities. This is ... I think in many ways, between you, Susan Fowler, and others have sort of opened people to see that tech is not so benign.
So I give Susan way more credit than I give me. And you know ...
This is at Uber.
I give Tristan Harris more credit than I give me.
I’d say it’s a multifaceted approach, but these are all the same messages.
Renee DiResta, who works in this larger team. There’s Sandy Parakilas, who’s now at Apple. There’s Tim Wu and you know David Carroll...
There’s a lot of us, me too, also.
And you, huge, right? And David Kirkpatrick, a lot of people are contributing to this thing.
What do you think it is?
In terms of writing the book and what I hope to get at, it was a really simple thing. We were in a strategy session at Washington and somebody pointed out that you get to a point in the curve where you can no longer reach a large enough group of people face to face or around the table in Congress. That you have to start to have a different kind of medium plan.
And we got a lot of TV, but there was no way to sustain that, and they said somebody’s got to write a book. And I thought Tristan was the right one to write the book but he didn’t really want to write the book, so, again, everybody takes a step back, it’s me, I write the book.
And so, what’s the goal? The goal is basically I use the narrative arc of my discoveries, so I’m Jimmy Stewart, this is Rear Window, I see something that looks like a crime scene, I pull on the thread without any idea what’s going on. I learn and I use that narrative to teach people what they need to know to understand the business model, how the algorithms work, the cultures of these companies which are the source of all the problems.
Not because the whole story’s in here but rather because there’s enough of the story in here so you can recognize the next parts as they come along.
And then I finish the book by giving three chapters of guidance.
You know? And the guidance is how to protect your children, how to protect yourself, but it’s also how do you use your power with your elected representatives to get them to do the right thing. And then lastly, I tell you here are the things I’m actually doing, some which may work for you, some of which may not.
Be specific about a couple of them.
So, Google. Google is the most intrusive surveillance company on the planet.
Sorry, I should say at least in the United States. In China they have competitors. But here they are the most.
They’re moving in there. They’re heading back there.
So I have, for the last year and a half, played a video game against Google. It’s a version of Frogger. Google is the river, and the alternative products are the logs and I’m the frog. And so, whether it’s Duck, Duck, Go or Ghost Story or One Password or Exchange or Safari, whatever it is. There’re all these products. And every once in a while, I’ll inadvertently click on a map on some restaurant.
The maps are good.
And then I wind up falling in the river and I have to go back to the beginning of the game and start again. But I’ve actually at one period of time where I went two whole months without touching Google, right? And so that’s like my high score.
I do like their maps.
But I was lucky because I wasn’t using Gmail.
And I have managed to persuade people to let me get away with not using Google Docs, which is the hardest single thing to avoid.
It is, yeah. Oh man, I’m so into the river. I’m so deep in the river.
Exactly, we’re all deep in the river, and the point is you have to do the things you can do. Because these products are really convenient, they’re really useful. And you know, I totally ...
So why? Because you think they’re a surveillance ...?
And I also wanted to see if I could do it.
Because you find them to be so intrusive from a ...
And my point is it was something I could do. These things are so convenient but there’s some evolutionary thing about convenience that makes you choose it even when it’s bad for you, and so what I thought I would do with this thing ...
Yeah, I thought I would just see what I could do with this. And with Facebook what I’ve done is no politics. I used to do so much politics on Facebook.
There were people who would hit my buttons and I’d just go completely ballistic.
And I bite my tongue, I just don’t let them do it. You know, I only share stuff for the band and the book. People have pointed out, “Hey Roger, you’re talking about the book all the time on Facebook and Instagram, you’re actually doing ads on Facebook and Instagram.” And I go, “Yeah, why?” Because Facebook and Instagram are the best advertising platforms in the history of humanity and if you want to reach people to tell them about the problems of Facebook and Instagram, there’s really no better place than Facebook and Instagram.
Well actually, it isn’t even ironic, it’s just how it is, right?
And so I look at this as, you know, there’s no obvious black-or-white answer. This stuff’s complicated. My problem is not with social media. My problem is not with Sergey, my problem is not with Google Docs, it’s with a business model that basically says that it’s not only ... You know, in advertising they say you are not the customer, you’re the product, but for Google and Facebook you are the fuel.
That’s a better way to put it, yeah.
And the problem is they gather all this data, not to improve your customer experience. Although they do a little of that, they really do it in order to create other products that may never even touch you, where you get no benefit at all. And importantly, they do this on the Silicon Valley model of shipping the product the minute it works without any consideration to the possibility there’ll be collateral damage.
And so there are all these toxic chemicals.
They have no sense of consequences, that’s one of my things that I try to push in on. I always make this joke that they should of think of everything as in what would be the episode of Black Mirror if this product goes the worst, then don’t make it. Or putting things in place to create it so it doesn’t get to that level. But they don’t. The self-reflection is so ... That’s the one thing I need to get through to people, this lack of self-reflection. I always say it’s a miracle they can see themselves in mirrors.
It’s not just Facebook, it’s everybody in tech.
Mark is probably the worst on self-reflection.
No, but it is in this notion of what we’re doing is so important, right?
That any means necessary to get there is justified and of course every tech company has always shipped products at the first moment and let the users sort out the problems. It’s just now you’re talking about global things with huge political power that’s not elected and is unaccountable.
Why don’t they see it? I have thoughts.
Let me finish one thought about this because I think this part’s really important. I think the answer here is that these guys are like chemical companies and like energy companies that there are toxic spills that happen as a consequence of their actions. And the reason those margins are so high, the reason the stocks are so valuable, is because nobody is forcing them to pay the costs of cleaning up the messes they create.
That’s exactly right.
And I believe the answer here, the way you change the incentive, the way you improve the business model is not through any other kind of regulation, it’s by making them legally liable and economically liable for the consequences of what they do.
So in Germany today, we have a new story about Germany coming down on Facebook because they think the data collection practices are wrong. That is a fantastic approach. Another approach would be to sit there and say anybody who has a problem with the data collection processes, why don’t we sue Facebook and collect the money? I think the latter approach will move Facebook a lot faster than the regulatory would, because the lawyers will find some way to shimmy the regulatory thing, but if you make it about money ...
Right. Well, that’s always been my thing is that they’re so profitable, I’m like that’s because the chemical companies don’t have to put filters on their pipes.
Right, right. When the chemical guys could pour the lead and the chromium and the mercury in the river, they were really high-marching businesses. Once you had to pay for that stuff ...
So what about section 230, you think that should go? That was designed to create an evasion, now you’re creating evasion for companies that don’t need the protection.
Well, I would actually argue that the most negative forces on innovation in Silicon Valley are Google and Facebook and Amazon.
I agree. I don’t think Facebook is innovative in any way. Someone asked me that, I was like, “Facebook innovative? Evan Spiegel is chief product officer of Facebook, as far as I can tell.”
And what’s going on is, it’s just like AT&T at the time of the break-up where they could’ve been doing cellular telephony. They could’ve been doing broadband data.
They were not.
But those things were not part of what they were doing. And I think if you break up these companies, you know, I like 230 for small companies. I think there’s some scale about which 230 doesn’t make any sense at all. And there’s something where you go from being a kid to being an adult where you have to be responsible for the consequences and 230 is inappropriate in that situation. But I there’s a ...
This is broad immunity, for people who don’t know.
Right, it’s basically a safe harbor from the actions of third parties. And basically the way the industry’s set up, everything’s done by a third party. And right now, because of the ridiculous way we think about antitrust in this area, which is you only look at price increases, these companies have gotten away with blatant anti-competitive things against competitors, against suppliers, namely journalists and publications and also against advertisers.
The great thing is that all you have to do is look at this business in economic terms as a barter. They’re trading services for data. So you have to ask the question, has the price of those services gone up in data terms? And the answer is they’ve gone up geometrically.
All you have to look at is, each individual app at these companies has been basically frozen for the last few years and yet their average revenue per user’s gone up geometrically — which is not the full answer, that’s just a marker for the fact that something might be worth investigating here.
And the point I’m making is that these guys have changed the economy so profoundly with their surveillance or with this business model, that it’s one of those situations where there’s a before and an after. And in the before state you have the wrong vocabulary, you don’t know how to talk about it. I don’t think they’re evil, I don’t think they’re horrible people, but I do think they’ve been told their whole life that they’re special, that they’re always right, and they’re not responsible for the consequences of their actions. And all three of those things, shall we say, are less than complete descriptions.
So how do you look at other companies? Like, you know, I’ve done these interviews with Tim Cook where he slapped them and the only reaction they had is, “He’s mean.” I get I’m mean a lot, by them, “I’m the victim, you’re too hard on us.” I’m like, “I don’t think I’m hard enough.”
And it’s a really interesting, again, lack of self-reflection. The attacks, people say I’m positive towards Tim but he’s actually saying adult things.
Well there are two things that I think worth noting here. One of them is that there’s a simple rule of regulation which is you should always take the first offer. Google should’ve taken the $2.7 billion antitrust judgment from the Europeans instead of telling them to buzz off. They should’ve taken GDPR, they should’ve taken the $5 billion deal, now the thing we’re negotiating is changing copyright laws to put YouTube out of business.
And, you know, these guys, they’re so ... Sheryl’s sophistication around politics is so great, I don’t understand why they’re having so much trouble. I wonder where the boards of directors are in these companies.
Nowhere, come on.
No, no. But my point is ...
Mark controls the whole thing.
I mean, there’s control but there’s also who’s sitting there and saying, “Mark, this isn’t right. You got to change.” Right?
No one. You think Andreessen or Thiel would do that? Come on!
But I’m saying, why is no one in the orbit doing it? Right, why am I doing this? Because no one else is, right?
Well, I think probably in that board, I would say Hastings is probably ... Erskine Bowles might be the other.
Well, I hope so. But I’m just saying, we don’t yet see the evidence that it’s working, right?
And the problem is, as you say, if Mark doesn’t want to change, he’s not going to change.
That’s right, that’s the evidence.
And Larry and Sergey, don’t want to change, they’re not going to change.
And you know, so as we look forward, the reason it’s so scary is I think Facebook at the margin, I don’t see the future problems coming from them nearly as much as I do from Google, Microsoft, and Amazon. Because I look at things like ...
Microsoft, it’s interesting you added them in there.
Well yeah, so here’s how I look at it, and they’re in different categories. So there are two problems. There’s IOT, Internet of Things, so smart devices with either Alexa or Google Home front ends, and then there’s the whole artificial intelligence forum. And so, if we look at smart devices, you’re now going to let the surveillance come into parts of your life you’ve never had it before. And you know, you say it’s okay in the kitchen, you go okay. And you say it’s okay in the living room, is it okay in your office? Is it okay in your bedroom? Last week we got news that Nest — which is a division of Google that makes, among other things, security devices — got hacked by some dude who made a family think they were under a nuclear missile assault.
So these things not only have a surveillance problem, they also have Android as their underlying operating system, which is relatively less secure than some other operating systems we know. And I just think we need to have a conversation about what are the limits? I don’t think this notion that people can collect data anywhere, buy data anywhere, and merge it and use it with impunity, I don’t think that makes sense.
So what happens?
My point is, I don’t think it should be legal to sell people’s location data.
I don’t think the telephone carriers should be able to sell it.
Which they are.
I don’t think that the bank people should be able to sell credit card data except under very strictly controlled terms. And you know, there are a whole bunch of things, nothing about kids, right? Nothing about minors. And yet they do it all the time.
Then we get to AI, and here you got this problem of a childish approach.
It needs data.
But you have a childish approach. Here’s a situation where, you know, the obvious thing is to say, “What do you want the world to look like?” Do you want it to reproduce all of the implicit bias of the real world? I mean, think about mortgages, there’s a thing called redlining where banks would historically restrict who could get a mortgage in certain neighborhoods and they might do it based on religion or race or something else. Well, if you use only the datasets of the real world to train the AI, that’s what you’re going to get and that’s exactly what they did get. If you look at things that review resumes, jeez, in the real-world workplace, are there any biases on gender?
Are there any biases on race? If that’s the only dataset you use, they go right into it. But now, instead of a thing where there’s a human right of appeal, it’s a black box with no right of appeal. And I think that’s deeply flawed. And you look at the facial recognition, same problem.
In China. The surveillance economy.
Okay, you’ve got all these things going on in AI. So that job one in AI, let’s think about the top three use cases economically today. No. 1, getting rid of white-collar work. No. 2, filter bubbles. Telling people what to think. No. 3, recommendation engines. Telling people what to enjoy or buy or share.
Well, I step back for a minute and I’m reminded of Steve Jobs’s notion of bicycles from the mind, that’s about human empowerment. Our jobs, what we think, what we like, and what we buy. Those are pretty fundamental elements of what make us different, what makes us individuals. And we’re going to delegate the things that make us unique to a computer. That seems like the opposite of bicycles for the mind.
We’ve got to finish up, but what do you think is going to happen? Where are you going to leave with this? It doesn’t sound like you’re stopping at all.
I want to drive us back to bicycles for the mind.
And I don’t know if Silicon Valley can get there. I sure hope it can. I think the city of New York wants to go there.
I think there’ll be lots ... Steve Case is going around the country, I think lots of people are going to like this idea. Because we know technology can empower us, and why we stop doing that is simply a flaw of a certain group of people at a certain moment of time having a power to carry out their vision. And it was a genius vision on its own terms. The problem was its own terms were not inclusive enough.
You’ve known me long enough to know that one of the things that really annoys people about me is that I have this tendency to be non-hierarchical and to be relatively inclusive in comparison to people in whatever jobs I’ve been in. And, you know, if you’re a beneficiary of patriarchy or a beneficiary of your skin tone, that can be annoying.
It can be. Although the mirror comment, I got you on that one. Remember that?
No, and to be ...
Just so you know, when he was doing Palm, we’re not going to go into Palm, but he said there’s a mirror on the bag, that ladies would like it, and I literally almost threw a shoe at your head.
And correctly so. Correctly so.
But, I get your point.
And somebody corrected me on a thing I said last night where I made a comment that would be typical of someone of my generation and it just was not sensitive enough and it really annoyed me that I made it. But the thing is, this is the point I want to make. We all have an opportunity to learn from this.
Yes, that’s a 100 percent.
I’m learning from it, I learn every day. I’m learning stuff from you today, I’ve learned from 10 other people today.
But why don’t they learn it? Two things I want you to comment on to finish up. I think they’re incompetent to the task, and I don’t mean stupid. I think they have none of the skills that’s capable of doing this, No. 1. Two, I think they see themselves as victims and they can’t believe people don’t like them.
That to me is really ... that means they’re not going to learn and it seems that to me is the end of any kind of era of society when they’re intolerant to criticism and they consider it attacks. Valid criticism. And at the same time they actually don’t have the skills to take on these complex societal issues.
I think those are perfect frames. I add to the first point, the one about the skillset, I think that they believe that there is a software or an AI solution to every problem. Once you get people into a filter bubble, then they take on to believing the thing themselves. It becomes a preference bubble. You cannot cure a preference bubble with code. That requires human interaction.
If people are in a cult, you cannot cure that. People at Facebook and Google live in a preference bubble. They’re so bought into their vision, and the vision is that code cures literally everything. No, you cannot cure ... I mean, they created a lot of the polarization in America, but they can’t fix it.
And so we have to fix it for them. We have to take that responsibility away from them. And you know, I think that’s not a horrible thing.
Who gets it? Who gets the responsibility?
Who receives it or who understands it?
Who understands and can fix it?
I’m a big believer that you have to change the business models that I’ve now concluded has to come from the outside. I’m very encouraged by Congress, we have 40 new members, average age roughly 40. Congress wasn’t as bad as everybody thinks before because one, Paul Manafort got raided by the FBI so you didn’t see the last 90 percent of the members of Congress who got after him. And there was a lot of really good questions and Mark did not hold up well.
But the truth of that whole thing is, our elected officials understand there’s a problem. What they need is our help to get it across the finish line. We have to tell them how important this issue is. The punch line in my book is we have way more power than we realize, because the elected officials want to make change on both sides of the aisle. They just need us to validate it. We need to be pinging them every single day.
Just think of this like an indivisible group. Just sit there and pick the issue you want — focus on children, focus on democracy, focus on privacy, focus on competition and innovation, it doesn’t make a difference, pick the one you like — and bang on them. And bang on them hard. Tell them, you know, to read this book.
The other thing you could do is, remember you can change your own habits. Ask yourself this question: if I knew that by accepting a little inconvenience, I could help to restore democracy, I could improve my own mental health and that of my children, I could regain the right to make choices without fear, which is to say have real benefits of privacy, and lastly maybe even make the economy better and more interesting and more diverse, would I accept some increase in inconvenience?
And the point is, each of us gets to make a different decision. I’m not going to tell you what to do. But, I’ve shown you in this book how to do that and what I do, and then you just make your own choice. But we’re all in this together. Remember, there’s only a few of them. I mean, part of the problem with these companies ...
You have a lot of money, Roger!
No, no, but hang on. Bear with me for just a sec.
They have blown up whole industries without replacing them. They’ve forgotten that what Schumpeter was talking about with creative destruction was that you had responsibility when you creatively destroyed something, to rebuild something that was bigger and better and restored everybody to a happier place. And they have failed in that. They’ve been irresponsible, and we now have to call them to task. And that doesn’t mean that they’re bad people, it just means that, culturally speaking, the country was in a bad place, it directed them to a worse place and now we’re going to come back.
Right, okay. So, last question, very short. Have you talked to Mark or Sheryl since then?
The last time I heard from either one of them was the email on October 30th of 2016, the last time I spoke to anybody at Facebook was February 2017 and that was Alex Stamos.
Are you going to send them a book? Do you have any confidence that they understand this now and are trying?
I don’t know, I don’t know. And my point is, at this point, I’m obviously the wrong messenger and so what I’m really trying to do is see if I can’t help to prepare somebody who’s a better messenger to talk to them. I mean, people don’t use ad hominem when they’re ready to listen, you know?
And so, that’s not important to me, right?
I’m worried about everybody else, okay? I’m going to focus on the 99.9999999 percent and somebody else can focus on the top guys.
All right, Roger. This is great, you’re not a crank. Stop it, Facebook. Stop calling him a crank. I appreciate it, thank you so much, it was great talking to you and we’ll talk more, I think.
Kara, please don’t ever change. You are a national treasure and I love you to death, thank you.
Thank you, I am not changing. I am single-handedly going to get a privacy bill passed in the next two years. That’s why I’m sitting here.
Hey, we got one in California. We got —
I know we do, I want a good one.
We have to put teeth into it. Okay?
And then we got to do it in New York, and if we have New York and California, we’re all set.
That is one of my goals, it’s ridiculous at this point.
Let’s do that together.
All right, fantastic.
This article originally appeared on Recode.net.