Zero to one, then to shit
I’ve seen it many times; I’ll tell you how it goes. First, there’s something the world needs. Television. A superior search engine. A better social network. A collaborative whiteboard, a blogging platform, a streaming service, an online marketplace — you name it.
Only very enthusiastic people want to use the thing because, at first, it is clumsy. The market is inert and unwilling to adopt the thing en masse. The thing cannot possibly sustain itself just yet. Creators want to improve it and live their lives; therefore, they need money.
Here come investors and give them money. They are always looking for something with growth potential, and the new thing seems like it could grow if given proper resources.
The thing grows. Creators can simply improve the thing to keep it growing, and there is so much to improve. Creators are happy, and users are happy. Soon, not only a bunch of geeks, but normies, too, start gradually adopting the thing. Investors are happy too.
Creators run out of investors money. It’s not a failure; it was part of everyone’s plan: creators were improving the thing, and investors wanted growth in user headcount. They did not want to waste time optimizing for revenue at this stage. They need to keep growing, and there is still room to grow, so other investors are excited to flood them with money.
The thing is good. It has many happy, loyal users and successfully solves real-world problems, and it has a business model that can provide a stable source of income, so creators adjust prices and cut redundant features to turn it into a sustainable business and keep improving the thing that effectively solves user needs and makes the world better in a meaningful way.
Nah, just kidding. They have investors money; they have to grow. and the growth becomes harder. It turns out, there is competition, and the fight for the remainder of the potential market is tough. The thing can get new customers only if they stop using the other thing, but they kind of like the other thing.
The investors form the board of advisors. There is no source of new customers beyond that, and creators cannot raise prices because customers would just switch onto the other thing, so the thing locks customers. The thing doesn’t let them export their data because privacy and doesn’t open the format because security. Creators acquire several adjacent products to poorly integrate them into the thing and proudly call it building a “safe ecosystem” or providing an “end-to-end experience.”.
Development teams are either busy expanding the ecosystem or optimizing revenue per user by adding banners and marketing tooltips, so the base product effectively stops improving. Bugs pile up and technical debt accumulates, so the product quality deteriorates. Copywriters and designers are running countless A/B tests to optimize NPS and ARPA. Support and sales agents work overtime.
If things go well for the thing, it wins. The other thing effectively goes out of the game, and all the next big things cannot possibly compete because the customer lock and carefully built network effect are no dogshit.
The whole world is using the thing by now, but several series of investors still expect returns on their investments. The board of advisors invites a management consultant from McKinsey and hires a Chief Business Transformation Officer with experience in the Big Four. They do the arithmetics and optimize costs. First they lay off support agents and salespeople.
Then they optimize buying prices. Spotify pays artists almost nothing and introduces paid in-platform promotion. Booking.com makes hotels agree not to offer lower prices anywhere else and offers better search placements in exchange for a higher commission. Meta and Google manipulate stats and ad rates as they want. Uber pushes drivers to work ridiculous hours for a barely predictable wage. Amazon does all of the above. They are all powerful buyers, sometimes effectively monopsonists; they can do that. Because of that, they can keep lower customer prices: “customer satisfaction at all costs,” becoming even more powerful buyers. Business coaches teach it as a desirable business strategy, calling it a “virtuous cycle” or a “flywheel model.”.
Then they keep providing high levels of service, iteratively improving the user experience. Lol, kidding again. The flywheel has so much shit on it and is spinning so fast that it’s equally spraying on everyone, except a bunch of C-level executives in the center of it. They have to grow at all costs, but the markets are exhausted and the sellers simply cannot give any lower buying prices. If they could, they would have to. From here, there is only one way: squeeze the money from end users. And so the enshittification begins.
Google search sucks because it optimizes for the number of queries to show you more ads. They don’t care about what you need. Instagram sucks because it optimizes for revenue and shows you the most addictive content ads instead of who you subscribed to. They don’t care about what you need. TVs, smartphones, and cars suck because their manufacturers make planned obsolescence the core of their business because they optimize for the number of units sold. They don’t care about what you need.
What’s more concerning is that the world starts to suck. Shitty devices are turning into electronic waste; pointless energy-draining AI features grow their roots into every product; it’s harder to find information on the internet (thanks Kagi, at least this problem is on track to be solved); you are subscribed to Medium, Spotify and Netflix, but can find nothing interesting to read, listen nor watch. You just can’t have good things.
In textbook capitalism, if a product starts to suck, competition responds with a better one and people start using it, so the product has to adapt to stay competitive.
Well, in reality, it doesn’t happen. Or it happens, but slow enough to let the industry turn into shit. It turns out that the system we’re living in is far from textbook capitalism and closer to some sort of global techno-feudal dystopia. Network effect, legislation, lobby, platform defaults, marketing, the “flywheel,” monopoly, and combinations thereof. The internet landlords of today have PR agents and lawyers who are very good at their job. They are backed by the same fistful of capital funds that own the largest world media, so they can get good public image support. They don’t care about you. They are too big to care.
