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Techcrunch- Silicon Valley Can Do Better Than Facebook


Editor’s Note: Alexander Haislip is a marketing executive with cloud-based server automation startup ScaleXtreme and the author ofEssentials of Venture Capital. Follow him on Twitter @ahaislip.

Congratulations to Facebook for going public. Congratulations to the employees that are now millionaires. Congratulations to the founders who are now billionaires. Congratulations to the bankers, lawyers and investors who have added to their already considerable wealth. You’ve grasped the brass ring we’re all reaching for.

Yet the company that’s been created isn’t what I want from Silicon Valley.

Let’s lay aside for a minute the foibles of the founders: Mark Zuckerberg’s hacking Harvard’s servers and the email accounts of journalists, his decision to “fuck” the Winklevii “in the ear”and Eduardo Saverin’s ridiculous tax dodge. Let’s forget about the Facebook Beacon “mistake” or the comment censorship thing. Let’s forget about the privacy implications. Just take anything that makes you queasy about the company and put it in a box for one minute to consider Facebook objectively.

Facebook sells advertising—it may be the most effective advertising platform since Google, or not—but that’s not the best use of the brightest minds of our generation. Advertising doesn’t improve our balance of trade. It doesn’t lift people out of poverty. It doesn’t employ the modestly skilled. It doesn’t extend life expectancies or take away pain. It doesn’t improve our standard of living.

Silicon Valley is at its best when it uses its unique combination of talent and capital to advance society, to create even better tools for creation, to unlock the potential of people not just here, but across the globe.

Where Facebook Falls Short

There’s an old gambling saying that if you don’t know who is the sucker at the table, it’s you. The same might be said of online businesses these days: if you don’t know what’s been sold, it’s you. Facebook sells your content, your connections, your time, your attention, your personal information to advertisers. The company is only a conduit for what you do. Its value, set by the market on Thursday, is a reflection of the worth of what you’ve contributed and created.

Yes, each time you sign in to Facebook, you’re going to work for Mark Zuckerberg. Each time you update your status, post a video, check in or just sit and watch everybody else do it, you line his pockets.

And I wouldn’t mind that a bit. In fact, I would applaud it, were the product of these hours more profitable.

The fact is that much of the time spent on Facebook is wasted. The company says in its S-1 that users spent an average of 175 million hours per day on Facebook in February 2012. That’s a lot. Compare that to say, the 100 million hours Clay Shirky and a researcher at IBM calculate it took to create all of Wikipedia.

What’s Wikipedia worth? I think it’s priceless, but back in 2008, Business Insider estimated that if it were to become a commercial enterprise, Wikipedia would be worth $7 billion. Say it’s just half that—adjust for the Henry Blodget factor—and you’d see that the value of contributions to Facebook, were they as valuable as the time spent contributing to Wikipedia, ought to be worth $6.125 billion per day.

But it’s not. Contributing to Wikipedia increases the availability of the world’s knowledge. “Liking” Starbucks contributes only to the knowledge advertisers can use to better target you.

It’s much better to watch television. Television, like Facebook, gets paid by advertisers for your time.When advertisers pay TV channels, the money flows to many different pockets. There’s the TV stars, of course, but there’s also the crew: the craft-services, the set designers, the costumers, the line producers, the sound engineers, electricians, gaffers, writers and key grips. All the people who make the TV show get a slice of that advertising dollar and these are good jobs, many unionized, that don’t require a fancy Stanford computer science degree. And each person employed making TV shows pays taxes and pumps their salaries back into the economy.

And the product of their work can be exported. When the U.S. sells movies and TV shows abroad it improves our balance of trade and helps make the products we import, such as iPads and oil, less expensive.

When advertisers pay Facebook, the money goes into the pockets of Facebook shareholders, employees and computer makers. Most of Facebook’s stock is held by a single person and only a small, select group of highly skilled programmers can secure a spot on the payroll. The wealth created by Facebook gets concentrated into the hands of a few—some of whom have refused to pay taxes on their gains—instead of being recycled into the greater economy. And the computer makers that supply Facebook rely on components imported from other countries, sending capital abroad and weakening our balance of trade.

Facebook’s rise is great for Zuck, but unless you’re among a privileged few, it isn’t good for you.

There’s one other important difference between television and Facebook. Great television approaches art. I’ll remember the drama of The Sopranos and the laughs from 30 Rock long after I’m done looking at those pictures of your niece’s baby.

We Can Do Better

The Facebook fans are quick to defend the company’s value. It empowers connection! It brings people closer to each other! You can’t put a price on that! It helped organize the Arab Spring, for goodness sake.

Facebook enhances loose connections and keeps you in contact with the people you wouldn’t invest the time to call or write an email to. Seeing pictures of a friend’s ultrasound may be priceless, but the value comes from you, your connection to the friend and the miracle of life, not the service that delivers the image. Facebook did help people organize in advance of the Arab Spring, but so did Twitter, email, SMS and many other vectors. And there certainly were revolutions before Facebook and will likely be revolutions long after Facebook powers down its last server.

Facebook isn’t bad. It is just a low-value use of time that doesn’t contribute much to the economy beyond enriching the rich. What more valuable things could be done with the time, energy, effort, creativity and capital invested in its making and daily usage?

There are startups doing amazing things here in Silicon Valley still. Sure there are the electric cars, robot butlers, space rockets and a bunch of hyper-ambitious projects. But you can have a positive contribution to the economy and the world without curing cancer or feeding starving people in Africa (there is a venture firm in San Francisco working on sustainable agriculture if you do want to make a difference in the subcontinent). I’m often impressed by people working to prevent outbreaks ofnasty viruses with rapid vaccination development or others creating systems to radically improve the energy efficiency of large buildings. These companies’ goals are obtainable, their achievement would be beneficial and the products would be the world’s envy.

With Facebook public, perhaps the past half-decade of social networking, casual games, virtual worlds, MMORPGs, app stores, avatars and “pokes” will give way to a renaissance of startup companies that make real products of tangible value that employ regular people. Such a return to Silicon Valley’s roots could reinvigorate the American economy and once again put this unique place at the heart of human progress.



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