As I wrote a year ago in The Rot Economy (and as I argued on the first episode of my podcast Better Offline), I believe that both public and private markets have become decoupled from the concept of "good business," ruled instead by a hunger for the eternal growth of revenue and market share, regardless of whether they're making a good product or treating humans as disposable in the process.
This is why your Google search results seem worse, or you're seeing too many videos on Instagram, or why the App Store's "free" section is pumped full of microtransaction-laden apps that are most decidedly not free, or why your iPhone likes to nag you with ads for Apple products — because these companies must always demonstrate revenue growth, every quarter, without fail, to be regarded as "successful" in the eyes of the market.
Public tech companies added $2.4 trillion to their market capitalization in 2023 as tech firms laid off over 260,000 workers in the space of a year (though that number is inclusive of private companies). In January 2024, over 23,000 tech workers were laid off from companies like Google ($19.69 billion in profit in Q4 2023), Meta ($11.58 billion in profit in Q4 2023), and Microsoft ($22.29 billion in profit in Q4 2023) as they pushed into the buzzy and unprofitable world of artificial intelligence, burning billions to try and reach feature parity in a world of "innovation" that never seems to end with a particularly useful product.
As I've said before, Google should've fired CEO Sundar Pichai by now for mismanaging his company to the point that it’s had to fire more than 12,000 people in the space of a year, costing it $2.1 billion in severance, in addition to laying off more than a thousand in the first 44 days of 2024. Yet Pichai continues to get paid unfathomably large sums every year, making $221 million in 2022 — a year in which Google made thousands of unnecessary hires to meet post-lockdown demand that would obviously dissipate as life returned to normal.
If a worker were to make such a categorical mistake that thousands of people had to be let go, they would be let go with them. Yet executives are never the victims of their own decision-making. C-Suite executives at Meta received six-figure bonuses as thousands of people lost their jobs last year. Indeed, it seems that the only people that shoulder the responsibility of a CEO's decisions are those that actually do the work.
In fact, I'd argue that investors — not just those backing pre-IPO businesses, but also those investing in public companies — have become entirely disconnected from production, to the point that an alarming amount of modern business is done to please investors over customers, turning product strategy into a form of symbolic marketing. Our economy isn't one that produces things to be used, but things that increase usage — and the result is the public decay of creativity and innovation.
Decaydence
Nowhere has this effect been more pronounced than in the media, which is currently suffering horrifying consequences at the hands of some of the scummiest executives to ever walk the Earth.
The Messenger, a news outlet that raised $50 million in venture capital and hired 300 people (many of them reporters), abruptly shut down on February 1 2024, leaving workers unemployed, uninsured, and without any kind of severance package. From the outset, the Messenger was doomed, both by corporate mismanagement — spending $8 million in office space in New York, Washington DC and Los Angeles and $900,000 a year on their CEO Jimmy Finkelstein — and an aggressive and wrongheaded editorial strategy driven by people who didn't know what they were doing other than that "more traffic was good."
After the company’s collapse, Eli Walsh, a former Messenger employee who joined the company after a career in California local journalism, described a constant pressure to produce more content, with much of it lifted from other publications, notably the Daily Mail and the New York Post. “I have no usable clips in eight months' time because of this editorial strategy. Zero. Not one,” he said.
Sports Illustrated, formerly one of the most important brands in sports journalism, was slowly choked to death after being sold twice, first to Meredith Corporation (which acquired it as part of its $1.85 billion acquisition of Time Magazine in 2017), and then again when the intellectual property was licensed to Authentic Brands Group (a holding company) for $110 million, with the actual goal being to put Sports Illustrated's brand on things like medical clinics and gambling businesses. Meredith Corporation would continue publishing Sports Illustrated until 2019, when Authentic Brands Group would license editorial operations to The Maven as part of a 10-year licensing deal, which promptly laid off 40 people, shifting its editorial strategy away from deep and thoughtful analysis to focus on breaking news, the thing that people can get anywhere, all while flooding Sports Illustrated's website with contributed content from affiliate sites run by poorly-vetted "contributing bloggers."
Sports Illustrated would spend years deteriorating until January 2024, when The Maven, now called "The Arena Group," would lay off most of Sports Illustrated's staff after failing to pay Authentic Brands Group the licensing fee required to keep running Sports Illustrated into the ground, owing over $45 million in unpaid fees. Now the future of the publication is in jeopardy, with Arena Group claiming that it may, somehow, keep publishing Sports Illustrated. Arena Group posted a net loss of $50 million in the first nine months of 2023.
What's very important to know about Sports Illustrated is that it used to be profitable. It was profitable when it was acquired in 2019, and stayed profitable through 2020. Its value (over a hundred million dollars) did not come from its logo, but from what the logo symbolized — important, meaningful sports writing from writers like George Plimpton, Curry Kirkpatrick and Emma Baccellieri. The thing that made Sports Illustrated famous was turned into a tool to be licensed to a holding company and licensed to a blogger network. The people that drove both The Messenger and Sports Illustrated into the ground are neither readers nor writers — they're do-nothing private equitors that contribute nothing to the world that make bad business decisions that seem disconnected from both the creation of stuff and the ability to make money from it.
And, most recently, Vice Media announced it would no longer publish written content to any of its flagship publications — including Vice.com, Vice’s regional sites, and its acclaimed tech vertical, Motherboard. An unspecified number — though measured in the “hundreds” — of workers were let go. It was an ignominious end for a publication that started life as an indie punk magazine in Montreal, eventually becoming a globe-spanning publication valued at $7bn.
Vice — although repeatedly lampooned for some of its faux-gonzo writing, which often consisted of privately-educated twenty-somethings waxing lyrical about the virtues of hallucinogenic substances — did a lot of good stuff. Simon Ostrovsky’s coverage of the earliest days of the Russo-Ukraine War, which culminated in him being arrested and held captive by separatists in the Donbass, provided important illumination to a conflict that few understood at the time — or even really cared to understand. This work earned Ostrovsky and Vice two Emmy nominations, plus a couple of Webby awards, and was rightfully seen by many as the Internet finally challenging traditional broadcast media in the conflict and foreign policy reporting spaces, where it previously enjoyed a monopoly.
Vice had an uncanny ability to access some of the world’s most isolated and dangerous places, and come back alive to tell the tale. North Korea. Siberian lumber camps, where an army of North Korean workers toiled in spartan conditions, raising money for their “Dear Leader.” The Syrian city of Raqqa, which, in 2015, was the capital of the Islamic State’s self-proclaimed caliphate. And unlike many outlets, Vice actually made money — though it never seemed to be able to find consistent profitability.
So what went wrong?
While there’s no single definitive answer, they all share the same theme: the pursuit of growth and executive greed. Vice took on a lot of debt in its pursuit of becoming a global media empire. It expanded aggressively, made a lot of bad bets, and paid its executives lavishly. Executive compensation remained high, even when the company struggled to pay its utility bills and severance obligations. It took deals where investors were contractually guaranteed dividends — even if the company couldn’t afford them. And its aggressive push into branded content — like its 2014 deal with Absolut vodka — and partnership with the Saudi government undermined both its punk rock credibility and its editorial independence.
Most of the horrifying layoffs you've seen in journalism are a result of rot economics borne of the ideas of people who can't write and don't read. The news industry has spent a decade building itself on foundations made of sand, with executives desperate to change content strategies to match the constantly-shifting whims of social networks and search engines.
If you’re looking for somebody to blame, you can start with Cory Haik, Vice’s Chief Operating Officer. Before joining Vice, she co-led Mic, a publication she drove into the ground by forcing it to move from producing beloved written journalism to dancing to the beat of Facebook's "pivot to video,” leading to the company laying off most of its staff and selling its intellectual property to Bustle. Haik is an example of the media world’s failure to police itself - a career failure that has now driven two great publications into the ground because she doesn’t understand what the fuck she is doing, as evidenced by her 2017 op-ed claiming that we were “in the early stages of a visual revolution in journalism.” Cory Haik isn't a journalist, or an editor, or a creative — she’s a parasite.
The destruction of modern journalism is a result of people like Haik having power, and being allowed to make calls based on vacuous pools of data that don’t make sense without an immediate connection to the actual newsroom, let alone an understanding of basic business tenets beyond thinking that growth is good.
Worse still, these executives don’t really have any ideas, which is why they so often choose to grow media outlets like fledgling tech startups, failing to see the vast difference between an app that sells a service and a media company that makes content people watch, or the need to foster a relationship between a publication and its audience. Trust and authenticity are at the heart of media outlets, and readers are often highly sensitive to any change. If you mess with the formula too much, you inevitably alienate the people who pay the bills — either through subscriptions or ad revenue.
If you’re no longer concerned with loyalty, and only really care about people who stumble onto your page through a carefully-crafted Facebook headline or blurb, you don’t have to worry about alienating readers. You can experiment as much as you want — undermine editorial standards as you see fit — so long as you get that ephemeral, random, spontaneous social and search traffic.
When all you give a shit about is visits and impressions, your only real focus is that which would please Facebook, Twitter and Google - social networks that have used the news to fill their platforms with content until they no longer felt the need to, eventually choking the traffic they sent to publications. "Network effects" make the number go up, and that’s all that matters if you don’t know or care about what makes a lasting web presence, let alone a sustainable media outlet.
And few network effects have damaged the news more than Search Engine Optimization, where the allure of traffic from search engines like Google has led publishers to create content not with the goal of serving their audience, but attracting the spurious traffic that one might get from those searching "when does the Super Bowl start."
The result is a media industry in crisis. Desperate executives and disconnected editors twist their reporters' coverage to please Google's algorithms as a means of improving traffic to please advertisers' algorithms, creating content that looks and sounds the same as other outlets, which in turn leads to layoffs as profits fail to increase, which in turn normalizes and weakens the content created by the outlet. This is largely a result of those in power not actually consuming or producing any of the product that makes the outlet money, only understanding the business as a series of symbols that at some point create revenue, ostensibly from the written word and video.
When you make decisions for a website or company that produces words that it sells for money based not on the writing, but on how to twist that writing to make it "more profitable," the conclusion is always inevitable — the creation of identical-looking slop that people only read by accident, and the slow asphyxiation of journalism and culture.
It almost always leads to overstaffing and mismanagement, too. Any form of creative media requires an understanding that building an audience takes time and money, and that one cannot just spend a bunch of money to make that happen. But these craven idiots are as rotten as the rest of the economy. They believe that an outlet must be "big enough," that it must "cover everything," and that it must hit X traffic goal by Y quarter or it's trash. The media is being run by people that do not see value in people or the things that they create, but the metrics that come as a result.
These same executives somehow can't see the success of outlets like Defector, or any number of successful, profitable newsletters built with only a few people as a sign that people don't want the same shit in a different flavor, but the informed opinion of fallible, imperfect people. The world does not need another content mill aggregating the aggregation of another outlet's story, and though your content might get picked up by Google more often than another outlet's, that doesn't mean that that reader actually trusts you because you were able to tell them how to stream the latest season of a show. Every outlet that you read today that feels like a shadow of its former self — and there are many — has reached that point at the hands of somebody who doesn't read it and gets paid significantly more than the writers that keep it alive.
Tech companies have made billions of dollars separating readers from writers, and the only true salvation for modern journalism is rebuilding and reinforcing the relationship between writers and their audiences, and media properties fostering and empowering that relationship rather than smothering it to please an algorithm.
Ultimately, the Rot Economy's core problem is that decisions are being made about the things you love that exist to satisfy a party — an algorithm, an executive, an investor — that has no real interest in the product itself.
Shadows In The Cave
Back in the world of tech, Google is planning to replace its Google Assistant with its generative-AI powered "Gemini" (formerly called Bard) chatbot, laying off multiple people on the Google Assistant team in the process. This decision is one made to satisfy investors — a way of showing that Google is integrating artificial intelligence to "push the boundaries of where we need to go" according to Sundar Pichai, who I do not believe ever uses Google Assistant. Computerworld's JR Raphael, who absolutely does use it, describes the move as a sign that "Google [has] forgotten why a phone assistant actually matters — and what we, as actual users in the real world, need from such a service." While Google has yet to fully make the move, the writing is on the wall, regardless of whether the actual assistant is fit for the task and not, say, hallucinating things that don't exist.
Speaking of Google, in late February, HouseFresh — a Wirecutter-esque site that publishes lab-tested evaluations of air purifiers and filters — bemoaned how their Google traffic was steadily declining, despite the high standards of their coverage and rigorous review process. Although HouseFresh occupies a small niche in the tech market, it’s tough to fault the quality of its work, with all reviews detailed, tested against a rigorous and empirically-driven process, and accompanied with beautiful imagery.
Google’s algorithm, at least in theory, is designed to reward high-quality content that readers find useful. Content like HouseFresh’s. Obviously, Google doesn’t actually poll the reader of each site, so it has to rely on context clues. It can rely on specific telemetry for this, like the length of the article, the number of internal and external links, the number of pictures and subheadings, and the inclusion of certain language that indicates a level of rigor and depth. It might see phrases like “lab test,” or the inclusion of a quote from an external party or expert, and look kindly upon them.
These are all things that are, for the most part, easy to fake. HouseFresh identified several large publications that gave their seal of approval to low-quality, underperforming, and noisy air purifiers, including one that The Wirecutter (correctly) bullied into retracting its advertising claims. While these publications often said their reviews were based on empirical, lab-based tests, they never actually provided any evidence for this, or even discussed their testing parameters. Many publications based their reviews on random unsourced, unverified, and unvetted social media comments — including some that, hilariously enough, originated from suspected spam bots hawking the dodgy air purifiers.
This is a problem of private equity in media, with owners seeking to maximize affiliate revenue with zero regard for journalistic rigor. To put it bluntly, these sites are deliberately lying to their customers, trying to trick them into buying expensive crap in order to maximize their quarterly earnings. But Google, as HouseFresh argues persuasively, also shares some responsibility for failing to identify obvious attempts to game the system, and failing to differentiate between a proper review and a listicle filled with affiliate links.
One might think tech companies were afraid to misinform their customers or make their core experiences worse, and you'd be wrong. Amazon already plans to heavily integrate generative AI into Alexa, and Apple is planning the same with Siri, all to show the world that they're "innovative" and "pushing boundaries" without being able to explain how. Microsoft's one minute Super Bowl ad for its "Copilot" AI assistant showed people asking it things like "write code for my 3D open world game" and "make a logo for my classic truck repair garage Mike's," the latter of which produced four usable images in the commercial. When I tried to replicate this in the real world, Copilot made four images with completely incomprehensible text, only one of which said "Mike's." And while one might come away from the commercial thinking you can do something, it isn't particularly clear what that something is.
And I think it's because Microsoft isn't actually interested in users liking or using the product, but in showing the markets a new button that computer manufacturers can put on laptops that suggests that it is still innovative. It doesn't matter that their customers don't actually like Copilot and are worried about the mistakes it makes, because neither Satya Nadella nor his board members nor Jim Cramer nor any of the other people who actually invest in Microsoft will use it — they just need to be able to say that Microsoft has "still got it."
It also doesn't matter to the markets or investors that AI is both incredibly expensive and yet to turn a profit. As Paris Marx wrote, AI is causing tech companies to build massive new data centers to keep up with the incredible computing demands of artificial intelligence, and that these chatbots — despite clearly not being "better" at any task than a regular search engine — could cost ten times more to run than Google or Bing. These companies are buying thousands of acres of land and spending billions of dollars on data centers for products that are yet to provide any compelling reason why they require such incredible infrastructure spending.
OpenAI makes $1.6 billion a year in revenue, but it's clear that the company is far from sustainable, which is why CEO Sam Altman is trying to raise trillions of dollars to boost the supply of the Graphics Processing Units used to fuel an entire industry that has yet to find a profitable product. In a logical tech economy, one would be terrified that so many bets have been made on such shaky ground, but we're in the Rot Economy, where an unsustainable product with few clear use cases can burn billions of dollars and fuel our climate crisis because the tech industry has run out of fucking ideas. Generative AI is imperfect and costly to run, yet is held up as a solution to many problems that it can't even begin to fix.
I think the tech industry's (and venture capital’s) obsession with artificial intelligence is a symptom of rot, where products are created based on analytics and guesswork rather than actually thinking about what a customer might want. Artificial intelligence is allegedly going to change our lives, but it's difficult to find one compelling description as to how it will do so without tumbling into the murky world of tech bro science fiction — and even a $7 million Super Bowl commercial from a $3 trillion tech firm couldn't seem to find a tangible use case without outright lying about what the result would be.
And the rest of the tech industry — and society — suffers as a result of the rot economy's obsession with symbolic value creation. Tech companies are obsessed with juicing metrics to please Wall Street as our phones get flooded with annoying notifications and spam calls. The most common ads that I see on Instagram are scams where a guy plays a game that doesn't exist so that you'll download one of many different awful pay-to-win strategy games, and on Facebook, every third post is separated by a carousel of videos that have nothing to do with me, other than the fact that Meta wants me to see them. Social networks are no longer for networking — they’re content advertising platforms where, if we’re lucky, we might just get a chance to see stuff from the people we follow.
Google Chrome is used by over three billion people, yet continues to take up incredible amounts of RAM for reasons that Google doesn't care to fix. Using a smartphone to browse many modern websites introduces you to advertisements that take up a quarter of your screen and actively try to trick you into clicking them. And when you try to cancel many modern subscriptions, "dark patterns" will work to trick you into not doing so, to the point that you might think you've canceled a product you're still paying for.
These are all problems that can be fixed by the platforms in question — or they would be, if they saw them as problematic. Useless, misleading advertising improves Meta’s earnings, and Google Chrome being slow and ugly doesn’t stop people from having to use it for work. It doesn’t matter that mobile browsing sucks, or that nobody intentionally clicks a single one of those ads, or that these advertisements make us unable to read the content that we originally visited an outlet to read. Nothing really matters, as long as the numbers keep going up.
Every single one of these problems comes back to one point — that far too many industries are run by people who don’t see the customer as the recipient of the value of a product or service. This problem is central to everything I've written, and likely everything I'll ever write. It's bile-inducing and deeply ugly, but awareness is just one step in reversing the course of the Rot Economy.
Thanks for reading this week's newsletter.
Last week I launched my new podcast "Better Offline” with HeartRadio and Cool Zone Media. It’s a weekly show exploring the tech industry’s growing influence over society, and how startups, venture capitalists and big tech firms are looking to change the future - for better or for worse.
This week’s episode is an evisceration of the Winklevoss brothers - the twin rowboat giants you might remember from the Facebook movie that ended up losing a billion dollars of their customers’ crypto. It’ll be out at 12AM Eastern Time on Wednesday February 28.
I'd be so grateful if you'd subscribe. You can find all the links (including the RSS feed) here. You can also join the Where’s Your Ed At Discord here and the very early (and fan-run) Better Offline Reddit here.
