Secrets of Silicon Valley — A two-part documentary by Jamie Bartlett (part 1: The Disruptors)

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In Secrets of Silicon Valley, a two-part documentary series for the BBC, tech writer Jamie Bartlett tries to uncover the dark reality behind Silicon Valley’s glittering promise to build a better world. Part 1, The Disruptors, contains a poignant interview Sam Altman, who runs Y Combinator. He tells Bartlett that anyone who questions the wisdom of where we are heading is “anti-progress,” and finishes this nonsense with a long and chilling stare. Part 2, The Persuasion Machine, will be aired Sunday, August 13th at 8 p.m. (BBC Two, also available on BBC iPlayer).

Secrets of Silicon Valley (part 1) — The Disruptors

The tech gods in Silicon Valley are selling us all a brighter future, but could the disruptive forces they are unleashing actually herald a much darker future?, tech writer Jamie Bartlett wonders in The Disruptors, the first of a two-part BBC series in which he explores what makes Silicon Valley such a force for change in all our lives.

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His search for answers starts with a visit to Rainbow Mansion. Home to “a bunch of global nomads who have come to Silicon Valley to pursue their dreams,” it calls itself “an intentional community of people working to optimise the galaxy.”

“Every Sunday night the Mansion hosts experts speakers. People come from all over Silicon Valley to share ideas. You can’t move without falling over a plan to solve one of the world’s pressing problems. Among this slightly cultish crowd, I found a man who scaled the heights of Silicon Valley. Bill Hunt created five start-ups he sold for half a billion dollars.” When asked what Hunt thinks is Silicon Valley’s attitude towards change — towards changing things, changing how industries work, changing how society works — he says, “There is a mind-set here that’s very focused on disruption. What can you do such that you’re not just talking about how we can make money, but how can we do things in a new way, in a better way, that makes the world better, both financially and socially? It’s thinking about, like, how do we get rid of this previous industry, this previous architecture, this previous system, and find a new way to do it, a way that’s better?”

“Rainbow Mansion represents what the dream of Silicon Valley is,” Bartlett tells us. “The idea that, just armed with a bit of technology and a thought about how to change the world, you can actually make it happen. That you can completely transform the way in which things are done, and that you can use technology in a way that will radically improve the lives of millions of people.”

The same fervour can be heard from the tech gods too. According to Airbnb CEO and co-founder Brian Chesky, “To be disruptive means you’re changing the world.”

“It all sounds so hopeful, but behind Silicon Valley’s ideals of disruption is a more traditional business reality. Cold, hard cash. Start-ups are drawn to Silicon Valley because of another vast industry, venture capital. Financiers who gamble billions of dollars on young companies in the hope of finding another Facebook or Google. But investment has a consequence. The founders of the two most valuable start-ups here, Airbnb and Uber, have attracted billions of dollars of venture capital. Even though Airbnb has only just begun to turn a profit, and Uber has been losing billions.

Maybe more than profit, venture capitalists want to see the potential for profit, and that creates a huge pressure on these companies to show that they’re always growing. Increasing the number of customers as quickly as possible — ‘killing it,’ as they say here — is the start-up mantra. But was does it mean for Silicon Valley’s mission to build a better world?”

Bartlett takes us to San Francisco, home to Uber and Airbnb, to meet Uber’s Head of Transportation Policy, Andrew Salzberg.

Uber’s vision is “getting away from everybody needing to drive their own car everywhere they go,” Salzberg explains. This, he believes, will have positive consequences for how cities are designed and laid out, “from the amount of parking that we have, to the amount of fatalities on the road, as well as the environmental impact.” Does this make Uber a social mission or is it a profit-making company?, Bartlett wonders.

Uber is here “to make money as a private business,” Salzberg answers. “But as you start to get into different places, and you change how people use vehicles, then you have all these other effects that you start to open up.”

It seems there is no contradiction between chasing profit and claiming to be working for the good of humanity. “But disruption means what is says,” tells Bartlett. “Around the world, traditional taxi drivers have taken to the streets in protest of Uber undercutting their prices. It’s a classic example of Silicon Valley disruption — destroying old industries by providing a popular, cheap alternative. But the social cost of this disruption goes much further.”

Bartlett takes us to India, home to more than a billion people and Uber’s top target for global growth. In Hyderabad, he explores the reality behind Uber’s promise to a new kind of flexible job, empowering its drivers, and sees for himself the human consequences of Uber’s utopian vision.

“With no profits and under huge pressure to grow against a strong local rival, Uber ran adverts on billboards and in the press, promising drivers up to £1,100 a month, around four times what these drivers had been earning.”

But as car ownership in India is low, especially among those likely to drive for Uber, the company helped drivers borrow money to buy brand new cars. However, “[a]s the numbers of Uber drivers rose, the number of customers didn’t keep up, so earnings fell. With a ready supply of drivers, the company cut incentives too,” leaving many drivers with huge debts and no prospect of a substantial enough income to pay these off.

When Bartlett asked a former executive if Uber should have been more open with the drivers about how their salaries or incentives might change in the future, he answers, “Obviously, yes. Drivers were misled.”

“The mantra of Silicon Valley is that disruption is always good. And through smartphones and digital technology, we can create more efficient, more convenient, faster services. And everyone wins from that. But behind that beautifully designed app or that slick platform, there’s a quite brutal form of capitalism unfolding, and it’s leaving some of the poorest people in society behind.”

Back In Silicon Valley, Bartlett realises how much energy these tech titans devote to presenting themselves as the heroes of the people, taking on all kinds of vested interests.

“One of the most remarkable branding tricks of the 21st century has been the way that Silicon Valley has managed to persuade us that they’re not like other companies. I mean, when you think about banks, or big pharma, oil, you imagine them as driven only by profit. And yet Silicon Valley, we imagine, is different. They are puffed up with social purpose to improve the world, that they’re the good guys. The founders of Airbnb for example, are connecting the world, not simply allowing people to advertise holiday lets.”

In San Francisco, Bartlett visits Airbnb’s HQ, where he meets with its Head of Global Policy, Chris Lehane, who, as Bill Clinton’s spin doctor, managed the Monica Lewinsky scandal.

Bartlett wonders if Airbnb sees itself as ‘a big business.’ But despite being a global tech giant valued at around 31 billion, Lehane says, “We do like to think of ourselves as a different type of company. The founders’ initial ideas was make money off of what is typically your greatest expense, which is your housing, […] and that still remains true today. You know, over half the people who are on the platform are low to moderate income people, regular people. They use it to cover basic expenses, including the cost of their housing.”

He adds, “Our founders, they came u with a real vision here, and the vision was to be able to use the platform to connect people to people. We like to say, we are of the people, by the people, for the people, but really the use the platform so that people can spend time with one another. You think about what’s going on in the world today, and people are talking about building walls, closing doors, putting up barriers. A real question of whether we are going to have an open society or a closed society, and this is a place that is really focused on using technology to help create an open society.”

According to Bartlett, “Airbnb claims to be on the side of the little people, and the only losers from their disruption are traditional hotel owners. But that’s not how it feels in Barcelona” where a growing number of residents are protesting against the influx of visitors, which they believe is damaging the integrity of their city.

When asked for a reaction, Lehane explains that regulators and governments will have to catch up and change their policies to take account of this new reality. Bartlett sees this as “a classic argument from the disruptors. In fact, Silicon Valley seems to have a pretty dim view of governments in general. That is most evident when it comes to tax. You can get an idea of Silicon Valley’s attitude to tax by looking at how the companies behave in their own back yard.”

Lawrence ‘Larry’ E. Stone is Assessor for Santa Clara County, home to almost all the major corporations in Silicon Valley. These corporations pay a local property tax at a rate of one percent of the value of all their buildings and equipment. It’s the job of Stone and his team to work out the value of this property. As is turns out, most major corporations dispute the value of their property. Santa Clara County has about 70 billion dollars of assessed ‘value at risk’ that is being appealed or disputed, mostly by major corporations, says Stone. Apple alone disputes the 6.8 billion dollar assessment, claiming it’s only worth 57 million. “They are disputing 99 percent of their value,” according to Stone. If Apple’s appeal succeeds, 68 million of tax would be slashed to just over 0.5 million. And Apple isn’t the only tech titan filing local property tax appeals.

“Around the world, tech giants have been accused of aggressively minimising their tax bills. The EU is demanding Apple pay up to £11 billion of tax it says is owed to Ireland. But how they deal locally with these issues […] says something about the culture of these places, the general approach of always trying to minimise the tax they pay or trying to work around governments. It makes a lot more sense when you come here and you see how a company like Apple behaves in its own back yard.”

“In the ’50s, ’60s and ’70s, Detroit was the envy of the world. Today, Detroit is in bankruptcy. We could go the same way if we don’t solve our public education and if we don’t resolve the commitment to the community as a people, as citizens and corporations.” — Lawrence ‘Larry’ E. Stone, Santa Clara County Assessor

“Of course, there’s nothing new about technological disruption. Steam power, electricity, production lines destroyed the industries that existed before them and forced governments to change. The world survived, life got better.” The question now is whether the Silicon Valley revolution will be different. The next wave of disruption could tear apart the way capitalism works, and, as a result, the way we live our lives could be utterly transformed.

Next stop, early morning Orlando, Florida. Here, Bartlett meets with Stefan Seltz-Axmacher, CEO and founder of Starsky Robotics which raised 5 million dollars to solve the primary logistical challenge for the trucking industry by taking drivers off the road and putting them in an office. Riding shotgun in a self-driving truck for more than a hundred miles on a highway, Bartlett asks what the next wave of Silicon Valley’s global disruption — the automation of millions of jobs — will mean for all of us. Does Seltz-Axmacher worry about the possible downsides of automation? But Seltz-Axmacher is confident that “we will inevitably find more things to do as jobs.”

Stopping en route to solve a technical problem, Bartlett contemplates, “That’s exactly what Silicon Valley is about. One you are out there doing it and you’re dealing with real-life problems, things going slightly wrong and fixing them up, you ca them demonstrate to the world that we have made this thing work. We’re not going to wait around for all the regulations. And then, almost by virtue of demonstrating its power, it forces the world to change around it. And I think that’s what happens when you take this kind of disruption philosophy, this idea of Silicon Valley, getting out there, changing things and the making the world catch up with them. That’s why they have conquered the world.”

But history may not be a good guide to the consequences of the next wave of disruption. The difference is that Silicon Valley is using data and software so machines can learn how to do things better than humans. “So, how far is this going?,” Bartlett wonders.

To answer that question, Bartlett is meeting the Australian data scientist and entrepreneur Jeremy Howard, the founder at Enlitic, an advanced machine learning company that helps combat the shortage of doctors and radiologists in the developing world.

“It turns out that figuring out what’s wrong with you and figuring out how to make you better is just a data problem,” he says. Howard uses deep learning software to diagnose cancer from medical images. “The software learns from examples to identify patterns, like we do. It spots problems by inferring from what it has learned, becoming evermore accurate. […] The software that I built takes about 0.02 seconds to look at a CT scan [it takes us, humans, 10 to 15 minutes],” Howard says. “So we can look at a million CT scan like that, and because we’re using neural networks, deep learning, to do it, it can literally develop the same kind of intuition a radiologist has. Within two months, we had something that beat [a panel of] the world’s best radiologist to diagnose lung cancer.”

According to Howard, the next wave of technology could make work more efficient by removing us humans altogether. “People aren’t scared enough, you know,” Howard adds. “Far too many [smart] people are sounding like climate change denialists. They’re saying, ‘Don’t worry about it, there will always be more jobs.’ And it’s founded on this purely historical thing of like, ‘Oh, there’s been a revolution before. It was called the Industrial Revolution, and after it there was still enough jobs. Therefore, this new, totally different, totally unrelated revolution will also have enough jobs.’ But it’s a ludicrously short-sighted and meaningless argument, which incredibly smart people are making. The totally utopian and dystopian futures are like very clearly in front of us. And very clearly we could head down to either. Honestly, the status quo — do nothing and we end up there — will definitely be a dystopia, which is a tiny class of society owns all of the capital and all of the data, and everybody else has no economic value, is despised by the class that has things because they’re worthless, and massive social unrest.”

Howard is the first person who is “very, very plain about what’s happening. This technology is exponentially improving, it’s going to change everything and we ought to be pretty afraid about that,” Bartlett says. He now wants to find out how far those at the top of Silicon Valley are really thinking about how automation will change all our lives

So, he heads for Y Combinator which provides early stage funding for start-ups. There, Bartlett meets Sam Altman, Y Combinator’s President. More than anybody else in Silicon Valley, Altman is considered to be able to predict the future. “He’s like a kingmaker of Silicon Valley. He gets to choose what the big companies of tomorrow will be,” Bartlett tells us.

[JB] You’re considered, I think, in Silicon Valley as one of the people that sees the future better than most. So, what are you seeing?”

[SA] A friend of mine says the best way to predict the future is to invent it. And that is a thought that was always stuck with me.

Thinking about what the future could be like after automation takes away the jobs of millions of us, Altman says …

[SA] We’re going to need to have new redistribution, we’re going to need to have new social safety nets. One thing, one product that I’m funding that we’re doing at Y Combinator is to study basic income, and what happens if you just give people money to live on. Because we have this world, we have huge wealth, but it’s very concentrated. What happens if you just give people money and say, you know, here’s enough money to have a house and eat, and to have fun?

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[JB] But do you think people would find fulfilment and all the other things, dignity in work for example, under a system where there’s a small number of very rich people, and they’re being given money to find things to do with their time? I mean, it sounds pretty terrible, pretty terrifying to me.

[SA] You have a very pessimistic view of the future. I hope you’re wrong. I believe that someone, you know, doing mechanical labour is not the best fulfilment of their dreams and aspirations.

[JB] But the problem, I think, or the thing that makes me pessimistic or nervous, is that society will have to change dramatically, and that’s quite worrying.

[SA] Look, I believe society will have to change dramatically. I think we’ve been through many of these changes before, and, look, I understand that people have this spirit of, ‘I’m going to hang onto the past at all costs, I hate progress and I hate change.’ And I hear that from you, I get it.”

[JB] It’s not that. It’s not hating progress. What if the progress that you’re, not just you, but the community here’s creating, is not what other people want?

[SA] There are 40 million people in the US that live in poverty. If technology can eliminate human suffering, we should do that. If technology can generate more wealth and we can figure out how to distribute that better, we should do that.

[JB] I think it’s an important job for journalists to try to ask about the negative possibilities of this stuff.

[SA] I think if you continue this thrust of, shouldn’t we stop progress, no-one’s going to take you seriously, because people want this stuff, and people don’t think we should still have people in poverty. People don’t think that we should take away our iPhones and take away Facebook. So I think you can add a really important voice, but I worry you’re going in the wrong direction with this, like, anti-progress angle.

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For now, Bartlett’s journey ends in the remote hideout of former Facebook executive Antonia Garcia Martinez who has literally armed himself with a gun because he fears this new industrial revolution could lead to social breakdown and the collapse of capitalism. Garcia Martinez believes not enough technologists are speaking out and informing the general public. “You don’t realise, we are in a race between technology and politics, and the technologist are winning, they are way ahead. They will destroy jobs and disrupt economies way before we even react to them. And what we really should be thinking is about that.”

Bartlett ends The Disruptors by saying, “Preparing a survival plan is extreme. The coming wave of disruption could bring great benefits. But there’s a risk Silicon Valley’s promise to build a better world could inflict a nightmare future on millions of us. Politics, in the end, has to be able to take control of this technology, regulate it somehow, slow it down if that’s what people want, but make sure that the technology is being built for people, in a way that people want, in a way that society wants, and not just in the interests of a tiny number of incredibly rich people from the West Coast of America.”

Continue reading (part 2 — The Persuasion Machine)

“I think if you continue this thrust of, shouldn’t we stop progress, no-one’s going to take you seriously, because people want this stuff, and people don’t think we should still have people in poverty. People don’t think that we should take away our iPhones and take away Facebook. So I think you can add a really important voice, but I worry you’re going in the wrong direction with this, like, anti-progress angle.” — Sam Altman, the President of Y Combinator

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