The “we-pretend-its-free-and-sell-you-out-behind-your-back-Web2.0-business model”

Silicon Valley goes through those phases. They are long enough that somehow, everybody seems to have forgotten that they are just the flavor du jour and will pass just like platform shoes and Milli Vanilli.

For the past ten years, all that anybody can conceive of doing in startup land is this:

  • we build a website that will be appealing to every last human being on the planet;
  • we cajole, bribe, shame, and what have you, every one of our users to make all of their friends sign up;
  • we give it away for free, and we don’t run any ads, so it looks beautiful, uncluttered, and very user-centric, so there seems to be no downside for the user;
  • and work real hard to make sure everybody visits this website as often as humanly possible every single day, and enters and gives us as much valuable personal data as we can get them to.

Then, when we “own” enough of humanity as users of our site, we turn evil.

  • we know we hold our customers captive: their friends hang out on our site, so it’s hard to leave for them; also, much of their valuable personal data is on our site, and they have no reasonably prospect of getting it out, so there are real costs for them if they wanted to leave;
  • our terms and conditions become less friendly;
  • we start plastering ads all over;
  • we sell out as much of the personal information that users gave us to advertisers as they will possibly give us money for;
  • when users complain, we say “tough luck” and “society’s standards have changed” and generally don’t care because we have the upper hand and our users know it. Humans probably have a built-in ability to recognize their overlord and behave accordingly.

It leads to billion-dollar market caps, yes. And also very defensible, sustainable businesses, so it’s great for the business and their investors.

But I think it’s also fundamentally dishonest.

  • If you plan to make money through ads, why not put them up from the beginning, so users know what they are getting into?
  • if you plan to change your terms of service to something that’s more favorable to data selling, and less favorable to your users, why not say so from the beginning? Perhaps you thought less people would sign up before you turn evil because they would be able to tell what you are up to?
  • if your real customers are advertisers, and your users mere sharecroppers, why pretend otherwise?

I can’t wait until the flavor of the day changes, and Silicon Valley goes back to a more honest model. $1 for 1 transistor, which reportedly was the deal for one of the first commercially produced transistors. That sounds fair to me. If this was today, it would be “free transistor! bring all your friends for more free transistors! but don’t be surprised if your transistors suddenly start working for somebody else after we change our contract with you retroactively”.

They say honesty wins in the long term. I hope so.

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3 responses to “The “we-pretend-its-free-and-sell-you-out-behind-your-back-Web2.0-business model””

  1. […] Today’s Web 2.0 business model — used by everybody in Silicon Valley from Facebook to Google and countless startups — is another version of it: create something appealing for free, have users bring all their friends and data so they can’t ever leave again, and sell them out behind their back. I wrote about this earlier. […]