The writer is founder of Sifted, an FT-backed media company covering European start-ups
One of the more curious and comical corners of the internet is the Amazon customer review section for the Hutzler 571 banana slicer. To date, more than 7,000 users have reviewed the yellow piece of plastic that sells for $7.80, disproving the view that Americans don’t do sarcasm. One user wrote that they used to cut a banana with a knife and clean the blade with water. “Now thanks to this gadget, I get to clean 17 individual blades every time I slice a banana,” they wrote.
Listen to the critics and you would get the impression that Silicon Valley has produced little more than one big metaphorical banana slicer in recent years. While trumpeting their own creative genius, the giant tech companies stand accused of pursuing innovation for innovation’s sake, solving few real world problems while generating new ones. The tech writer Brian Merchant has even declared the end of the Silicon Valley myth, arguing the big tech companies are now more concerned with extracting rents and crushing nascent competition than creating anything usefully new. “There is a sense that we have reached the end of the internet,” he writes.
Another critic quotes the refrain that 90 per cent of the start-ups founded by dweeby young men in San Francisco are simply trying to answer the question: “What things isn’t my mom doing for me any more?” Creating a frictionless future seems to mean launching speedy meal delivery, dog walking and laundry apps. “There is a tendency in Silicon Valley to want to be revolutionary without, you know, revolutionising anything,” writes Adrian Daub, a Stanford university academic.
Such arguments clearly exaggerate for effect but contain more than a chip of truth. Too many moonshots are still sputtering on the launch pad. It is not yet clear that innovations such as social media, cryptocurrencies or the metaverse yet represent any net positive for humanity. As sceptical economists never tire of pointing out, the digital revolution has so far had little quantifiable effect in lifting productivity.
But it might be that fashionable despair over technological progress is spreading just at the moment when it is about to have a real impact in addressing significant challenges, such as healthcare and climate change. As the economic historian Carlota Perez has written, there is often a decades-long time lag between the development of powerful new technologies and their widespread deployment. So it was with the steam, railway, electricity and mass production revolutions in the preceding three centuries.
There are at least three reasons to believe we may be entering a new phase of more productive technological deployment. First, the sharp downturn in public market tech valuations has resulted in a sizeable outflow of employees from big tech companies and an inflow of digitally savvy workers into mainstream businesses. More than 150,000 workers have been fired by tech companies around the world in 2022, according to layoffs.fyi, a website tracking the trend. That coincides with a 12 per cent increase in the overall number of tech jobs in the US to 6.4mn over the past year as banks, retailers, manufacturers and healthcare companies hire more technologically proficient employees.
Second, some of the most powerful technological tools, such as artificial intelligence, cloud computing and low-code/no-code software, can increasingly be accessed by every business. As one tech consultant says, it is no longer only companies’ chief technology officers who can understand and use these technologies, their chief product and marketing officers can do so too: “The heroes of the next era are going to be the product managers who focus on the outcomes, not the inputs.”
Third, venture capital investors remain enthusiastic about backing purpose-driven start-ups that are trying to address at least one of the UN’s sustainable development goals. According to Atomico’s State of European Tech report, more than $169bn has been invested in these projects since 2018. That appetite is particularly strong in Europe, which last year accounted for 57 per cent of all global early-stage funding in this area.
Building on the historical patterns identified by Perez, some researchers say we may be entering a new “techno-economic” paradigm in which the mass deployment of digital technologies creates a more productive, localised and sustainable global economy. In his book Sustainable Futures, Raphael Kaplinsky argues greater co-operation between the public and private sectors would accelerate the process. “Co-evolution” has already enabled remarkable growth for renewable energy, for example. But for the moment, he tells me, the positive trends suggest possibilities rather than describe reality.
What is needed, he argues, is for governments to smash the powerful corporate interests that stifle competition and offer incentives to invest in the green economy. This will only happen if civil society forces the issue. “The question is: are we at an inflection point in which the profitable logic of investment creates new opportunities?” he asks.
We do not yet know the answer. But Silicon Valley’s finest brains could certainly be put to far more productive ends than just coaxing internet users to click on ads. There are simpler ways to slice a banana and other fruit to cut.