Hello and tech care: New advice for startups

Photo: iStock
Photo: iStock

Companies are now factoring an emphasis on privacy, security and ethics in their hiring

Technological somnambulism" is a concept used when talking about the philosophy of technology. The term was used by tech philosopher Langdon Winner in his essay, Technology As Forms Of Life. Winner puts forth the idea that we are simply in a state of sleepwalking in our mediations with technology. The reasoning is that technologies are developed faster than we can possibly understand their full implications, and as long as consumers attempt to keep in step with the ever-accelerating march of innovation, they “willingly sleepwalk through the process of reconstituting the conditions of human existence".

According to Marcel O’Gorman of the University of Waterloo, what the kings of Silicon Valley really want is the “somnambulation" of its consumer base—a sleepwalking consumer is the best consumer. But a creeping deficit of public trust in powerful tech companies, or what has come to be known as a “techlash", might well be an indication that the somnambulists are waking up. This backlash against technology is for real, so much so that it is not only taking Big Tech down, but also having it to strive to win back the trust of people.

Scathing revelations about the role of fake news in the 2016 US elections, or Google being slapped with another record antitrust fine over its mobile software, or comparing tech firms that peddle “addictive" technology to be regulated like big tobacco, have set alarm bells ringing and are prompting calls of change.

Big Tech now finds itself facing huge scrutiny from regulators worldwide. It is fighting back to maintain or win the trust of its users. Companies are now factoring an emphasis on privacy, security and ethics in their hiring. According to CB Insights, some of the jobs read like this: investigations analyst for machine learning ethics at Google, director of privacy and customer trust covering Alexa service at Amazon, WhatsApp policy program manager for elections at Facebook, and so on.

Such developments have lessons for startups back home, especially as they now have global aspirations. There is a resounding message that even big technology companies can go from hero to zero if one is too fixated with a growth-at-all costs mentality. It is now calling upon the tech industry to re-evaluate its focus on short-term decisions that spur rapid user growth, and instead focus on how products will be used by society.

One might argue that despite the regulatory ire, Facebook just announced a jump in its quarterly revenues. This is exactly the question startups need to ask themselves: Do they want to grow into a tech giant that everyone loves to hate?

At the heart of the matter is the sheer power that tech companies/startups can command as they scale—Facebook is one of the richest and most politically influential companies in the world. But with great power also comes great responsibility. Startups need to be mindful of that. The argument has now shifted from innovation to responsible innovation.

If the techlash was not enough, there is growing noise around the tech bubble, which is now increasingly gaining currency among venture capital investors. Competition among VCs to invest in technology startups has driven up prices exponentially. But that pricing is justified only if there is an exit. Mega unicorns such as Uber, Lyft, Slack, Peloton and Airbnb, among others, are prepping for initial public offerings. If this group trades above their last private valuations, then it’s validation for the mega-unicorn phenomenon. Else, it’s a problem. Not only will it make or break existing funds, but it will likely determine the availability of late-stage capital.

Second, measures such as the modified foreign direct investment (FDI) rules for e-commerce, which has created pain for foreign players like Amazon and Walmart, will have other large FDI investor(s) become cagey about investing in India. Third, China is slowing down and sentiment isn’t great. Down rounds have already begun to enter the lexicon in China’s much-hyped tech sector. According to a Bloomberg report, venture capital deal-making is at its lowest since 2015 in China even as funding sizes shrink.

Whether it’s a techlash or a tech bubble, it will be interesting to see how the industry manifests itself in 2019. It’s about time the somnambulists woke up.

Shrija Agrawal is Mint’s associate editor. Due Diligence will cover issues in India’s venture capital, private equity and deals space.

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