Tech companies seem to be scammier and scummier than ever. What's going on?
"I Did Every Horrible Thing In The Book Just To Get Revenues" - Mark Pincus (2009)
I dream of scambox zero. That is, I long for the day when my email inbox doesn’t contain a single tip about a tech company – large or small – attempting to trick you with some deceptive, and usually illegal, money- or user- grabbing ploy.
As things stand currently, for every Tellspec, or Breeze, or Crowdfunder, there are a half dozen others vying for Pando’s investigative attentions. When readers ask “why don’t you write about this scampaign?” Or “have you looked into the background of this startup?” the answer is usually “because there aren’t enough hours in the day” and “not yet, but I promise I will.”
And still they keep coming – in larger numbers that I can ever remember.
So what does this explosion in low-level deception mean? And what are we to make of the attendant rise in generally shitty startup behavior: ClearSlide’s 10 hour day, Indiegogo’s refusal to clamp down on fraud on its platform, Zirtual’s mass layoffs and its investor’s bullshit public solicitation for new money after bad?
Ego wants me to believe that the increase in story tips is connected to the fact that Pando is pretty much the only independent voice left in the tech blog world. Everyone else is owned by Verizon or Comcast or Monsanto or IG Farben or whoever the hell, leaving Pando the only place free to cover wrongdoing in the industry. There’s probably something in that – and I’d be remiss if I didn’t thank Pando subscribers and Patrons for keeping us in business, and independently so – but the fact that the Wall Street Journal broke the Theranos scandal, and even recently followed up our 2012 story about VC scouts, shows it isn’t quite so clear cut.
A more likely explanation – and one backed up by others I’ve spoken to who live and work in the tech industry – is that there are just more scams to go around. That, in recent months, companies have just become more willing to behave in shady ways. That investors and executives are more willing to let that behavior slide, if it results in more revenue and more users. And that, thanks to the cult of the founder, there’s less board oversight than ever before to stop shady schemes before they even start. Fortunately, there also seem to be more employees – or former employees – willing to blow the whistle.
But why now? That old Mark Pincus at the top of the page offers a possible clue. It was first reported by Michael Arrington on TechCrunch back in 2009. According to Arrington, Pincus explained that he was willing to do any “horrible” thing to make his startups profitable because he wanted to retain control. “ I knew that I wanted to control my destiny, so I knew I needed revenues, right, fucking, now. Like I needed revenues now.”
Flash forward to the present day, and there are a lot of people worried about keeping control of their startups. We know there’s a “correction” or a “downturn” or a “clusterfuck” coming in the tech industry. Commentators smarter than me can point to all kinds of clever venture capital-y or Wall Street-y signs of the impending implosion. Others say they know there’s a bubble when we see an increase in companies that exist only to do low margin shit-work like parking your car, or doing your laundry.
I know something is bad coming because of the scams. The fact that so many stakeholders are willing to risk being exposed, and even sent to jail, for just a few extra bucks or a couple of hundred sign ups tell me that they know this is make or break time for a lot of shitty companies. Either they’ll be out of business in six months, in which case their bad behavior will be forgotten, or they’ll survive long enough to apologize and make things right. To stand a chance of survival they – as Pincus put it – “need revenues, right, fucking, now.”
A growing number of disgruntled employees willing to dish to Pando, and other reporters, about an increasing number of scams is a warning, just as clear as the rippling water in Jurassic Park warned Jeff Goldblum and Sam Neill about a coming T-Rex.
Something ugly is close, and getting closer.
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