Facebook, Amazon, Uber… When Technology Gets Lost in Useless Innovation

Seven billion dollars. This is how much US and European venture capitalists have invested in 2021 in startups offering fast delivery services, such as Deliveroo, Gorillas or Gopuff. This autumn, poster campaigns are multiplying in France to attract customers to these thirty companies promising to deliver a toothbrush or food in less than fifteen minutes. The fight is fierce: massive consolidation underway, acquisitions worth billions of dollars; the latest is the $3.5 billion acquisition of Finnish Wolt by American DoorDash.

Home delivery is part of a larger constellation of services that are a kind of digital concierge: catering, shopping, laundry or cleaning… A market that tantalizing minds call the “lazy economy.” We can also add the entire micromobility sector, offering self-service scooters and bicycles to pedestrians and attracting huge amounts of capital (about ten billion dollars raised worldwide in recent years). All these companies are aimed at a young, urban, busy clientele, for whom it is unthinkable to go down to Franprix or walk a mile and a half.

However, the golden age of this “useless” service economy may be coming to an end. Awareness of the social dumping associated with these services, which thrive at the expense of low-paid employees, and criticism of their environmental achievements have sparked controversy: are the promises of technology diluted with uselessness? The question arises in many areas, and the famous metaverse is a perfect example.

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This concept has been updated by Facebook, making a historic strategic shift to make people forget about the controversy surrounding the functioning of its social networks (Facebook and Instagram). So last year, Mark Zuckerberg’s company invested $10 billion to create a virtual universe that no one really understands the interest compared to real life. The impact of metaplatforms – Facebook’s new name – is such that ten to twenty times more investment is expected in the coming years from companies and investors terrorized by the idea of ​​”not being one of them.”

cruel comparisons

Let’s take a look at these amounts. Ten billion dollars is roughly the cost of producing the 13 billion doses of Covid vaccine that have been introduced in the world to date. Vaccines that were partly developed by remarkably frugal start-ups given the size of their discovery: Germany’s BioNTech was funded by its investors with 1.7 billion euros – 11 times less than Facebook paid for the purchase. WhatsApp in 2014 – while Moderna required $2.5 billion in capital, $1 billion less than Finland’s acquisition of DoorDash. Another significant comparison: Bill Gates spent 14 times less on the development of the post-Fukushima nuclear reactor than Zuckerberg spent on his metaverse. Its traveling wave reactor runs on radioactive waste, which is replaced every ten years.

True innovation, measured in decades and hundreds of millions of people involved, is therefore not so costly. What’s more, its value is dropping exponentially thanks to a host of tools that didn’t exist thirty years ago. Today it costs almost nothing to create medical diagnostic tools for use in developing countries, network them with computers the size of a pack of cigarettes, costing less than $30 each. In the same way, you can get skills at any cost where they are.

So there is no reason not to engage in high-impact innovation. Yet none of the technology promises that were supposed to benefit the greatest number of people materialized. The smartphone, the data industry, or artificial intelligence may offer breathtaking demonstrations, but they have not affected poverty, malnutrition, or life expectancy, which, moreover, is in decline in the United States, the country that invented the digital universe. And we’re not even talking about the lack of investment in technology related to the climate crisis.

Low impact of technology on development

In 2015, the UN announced at least 17 specific goals aimed at “ending poverty, combating inequality and ending climate change by 2030″. Last week, the Bill & Melinda Gates Foundation pointed out in a report that there has been no significant progress on most indicators: general poverty, malnutrition, access to drinking water, child mortality, the trend is very weak at best. “To achieve these goals, we need to go five times faster,” Bill Gates recently explained in an interview with the New York Times, “this is even largely underestimated due to the fact that we did not take into account the consequences of the pandemic, the war in Ukraine or the food crisis developing in Africa […]. The world is in a much worse state than I expected.”

Why has technology had so little impact on these important issues? Because the canons of investment in technology completely contradict the profitability prospects of high-impact innovation. A French entrepreneur working on cataract treatments in developing countries made a bitter observation: needs are in the south, capital is in the north. His potential creditors also suggest that he will focus on solvent markets.

This drift can be explained by two factors. First, it is essentially a marketing construct for technology companies focused on Western consumer goods. The reasoning of entrepreneurs and their financiers boils down to this: what is the size of the coveted market? What part can we accept? What means to use to grow as quickly as possible and be able to dictate prices (usually after many years of terrible losses)? The second factor is the obligation of profitability placed on venture capitalists who are under constant pressure from those who trust them with their funds (insurance companies, pension funds, private fortunes). The principle adopted by venture capitalists is usually based more on gut feeling than on objective analysis. Perhaps the best parallel is filmmaking, where you bet on a dozen projects in the hope of one or two big hits. Added to this is the herd instinct where no one will risk making mistakes alone, while collective failure is relatively acceptable. The need for “social approval” from the community too often inhibits destructive thinking.

Technically, this system worked remarkably well. Between 2006 and 2021, venture capital investment in the United States rose from $30 billion to $330 billion a year. This money has produced real innovations, such as in biotechnology. But he also created products and services that are of little use to humanity. The influencer market, for example, is now valued at $16.4 billion, but there is little reason for ecstasy: it has mostly caused depression in the millions of teenagers who spend nine hours a week comparing and grieving on TikTok or Instagram.

New priorities

Clouds have been gathering over the technology sector in recent months. They are the result of a combination of current or future shocks: climate, energy, food, geopolitical crises. Never before has the world needed such an innovative long-term policy. What kind of electrification should reduce emissions? Very well. But in the United States alone, this means a 100-fold increase in electricity storage capacity, which is not possible with today’s technology. Everywhere, even assuming that enough can be produced, distribution capacity will have to be doubled or tripled.

From this point of view, everything is XXL. The list of actions to be performed resembles a giant mixing console, all the sliders of which must be moved at once. We must significantly accelerate renewable energy programs and develop new types of nuclear reactors, and work on ways to reduce the demand for raw materials (rare earths, cobalt, lithium, which will skyrocket in demand, with all the risks associated with geopolitics). It will also be necessary to accelerate innovation in synthetic biology, rethink the manufacturing processes of almost everything that is produced on the planet, invent new materials, redefine the basic principles of urban planning and transportation, or even learn how to recycle as much as possible.

The financial cold that the tech sector has been experiencing since the beginning of the year is real. However, it should not overshadow two fundamentally positive factors. First, there are tools to refocus technology efforts. When used correctly, artificial intelligence, data science, simulation capabilities or robotics can solve many climate or development problems. On the other hand, in reality there is no shortage of capital. In the United States, as in Europe, the public sector plays the role of a locomotive with envelopes worth billions of dollars or euros. Venture capital also has huge surpluses, with US VCs alone having $151 billion in reserve willing to invest.

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Belatedly but surely, the investment industry is beginning to understand and sniff its nose. Larry Fink, CEO of BlackRock, an organization that manages $8.5 trillion in assets, believes that decarbonizing the economy is “the biggest investment opportunity right now” and that the next thousand unicorns “will be built from startups that will help with decarbonization” . and make the energy transition accessible to all.” chick?


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