This is an interesting look at not just social media, but a lot of the tech industry. There was a pretty large upswing in the amount of time people spent on social media in 2020-21, much like there was a massive upswing in streaming TV and movies, and in companies using buying licenses for new apps for collaboration.
That made sense. But this, to me, never made sense:
Maybe the pandemic wasn’t some sort of great tech accelerant, as the venture capitalists and tech entrepreneurs believed it to be. Maybe it was a high-water mark for a certain kind of business and a sign that we may have found the limit to how much time humans can spend looking at a glass rectangle. It’s seven hours a day, tops.
What we are seeing now in the demise of social media, tech layoffs, etc. is an investment world where shareholders watched huge growth numbers in certain areas during the pandemic and continue to look for those same growth levels, despite the fact that the market for that growth just isn’t there. We’ve watched companies like Microsoft go through multiple rounds of layoffs in the last year despite being incredibly profitable, just not as profitable as they were in 2020 and 2021. The large shareholders expected that growth to continue and started demanding that Micorosft start cutting costs to keep the profits at a higher level, and labor is the highest cost and easiest to get rid of quickly, so off went tens of thousands of human beings from a company that was profitable. This wasn’t a company losing money trying to cut costs in order to remain in business. This was a company making quite a bit of money, just not enough to satisfy Wall Street.
Personally, I have no idea why anyone would have looked at what happened in 2020-21 and assumed that was a trend versus an outlier. At the time, I worked in a field that was directly impacted by many of our clients rolling out Microsoft Teams hurriedly because they needed a collaboration platform. I watched the sudden, and massive, growth in Teams usage, but I never imagined that Teams usage would continue to grow at that rate going forward. Why would it? In normal times, the process of rolling out a collaboration platform would be much slower and more deliberate. and the sales process is going to involve convincing new customers that they need to switch from what they use now, again a much slower process. There is no outside force causing thousands of organizations to push out a new tool so there’s no way we should expect that level of growth to continue. Eventually, that process would slow down and be overcome by other priorities, much like using social media would slow down and be pushed aside by other activities. There’s no infinite growth to be had because we are all resource-limited. At some point, everyone who wants to have an Instagram account has an Instagram account and is using it as often as they want to. You can’t have huge growth spurts. You can only play around the edges and manipulate users to stay online to grow and that’s not a winning strategy. Yet it’s what shareholders and venture funds require. They’ve created a world where growing less than 20% per year might as well be failing. It’s sure going to look like failing when you start cutting jobs and doing stock buybacks. Those used to be desperate measures, but now they’re just a Tuesday at the office.
This is a problem, but it’s not just a “greedy rich people problem”. It might be a problem that is much larger than that. The reason I say that is because some of those large investors demanding these companies continue to show this level of growth are funds. The same funds that our 401(k) investments live in, which we all have a vested interest in seeing returns for our own investments. Indeed, if any of us imagine a world where we can afford to retire, we need those returns on our investments.
It’s quite the conundrum, isn’t it? Any hopes of the retirement that the US capitalist system has promised us is possible requires continued growth at levels that are not sustainable, but our attempts at forcing those returns might force many of us out of a job.