Have a seat, I have some bad news, and it affects us all.
The technology sector of the economy has a serious parasite problem
I’m sorry to be the bearer of bad news, but there’s a pandemic that’s been quietly evolving for more than the past decade. The parasite is as-yet unnamed, but we will refer to it in this piece as “ensh.”
Let me take you through my diagnosis:
The Cycle
There’s a typical process that I’ve seen play out over and over again in the technology industry. It describes different stages of an organization as it grows from an initial “tech-related” idea to a full-fledged operation to an empty shell of its former self. This process follows a dysfunctional pattern. Not all tech organizations will suffer from “ensh”, but most will eventually succumb to this parasitic infection.
Step 1: Opportunity
Everything starts when someone has an idea for a new platform, service, connector, or whatever. As long as it’s digital-in-nature, it qualifies.
This individual starts on the hard work of refining the idea, taking it from a nebulous cloud of “what-ifs” and “wouldn’t-it-be-cool-ifs” to an actual model. This is a lot harder than most people appreciate - while the core idea generally remains unchanged, there are countless details to discover, debate, and decide upon before the idea takes any sort of form other than living in someone’s head.
This is the core value proposition of whatever the original idea was - the specific way this idea will work, why it will appeal to people, and how they will interact with it. Generally, at this point of the process, the only tangile product may be an “elevator pitch” but not much else.
At this stage, the organization (or “host”) is not yet sick, but only vulnerable if certain precautions are not followed. However, the rate of infection is high, and of those infected, the prognosis is bleak.
Step 2: Exposure
This is when the idea becomes associated with something tangible - something people can see, use, or interact with that facilitates an understand of, and appreciation for, the core value proposition. To most people, this is where the start up actually starts because now they’ve got users!
How a start up gets here can vary.
Sometimes, if the original idea-haver is technologically apt, it’s through a lot of late nights and hard work of a small, dedicated team. Other times, it’s the output of a lot of meetings with a specialized consultancy that can help the original idea-haver go from idea to concept without that person needing to learn design, coding, marketing, and business all at the same time. Whatever the path taken, this step is always associated with an initial piece of technology (sotware, hardware, etc.) that a user can engage with.
At this point of the process, there may or may not be a corporate entity, but there’s definitely at least one person in a position of leadership, and that’s usually (but not necessarily) the person who had the original idea. The tangible product at this point includes not just the proven concept, but also a collection of associated data such as a database of users, analytics data about how they interact with the POC, a plan for what needs to be built and in what order, a budget (or forecast), and so on.
At this step, the host’s exposure is likely, and risk of infection is positively correlated with proximity to Venture Capitalist ideas and talking-points. Most silicon-valley based startups have no chance of avoiding infection.
Step 3: Infection
Now we’re in the danger zone: the step where a host becomes vulnerable and ensh begins to pose a threat. The determining factor is down to the decision by the leadership as to how they wish to grow.
Symptoms of infection manifest at this point in behaviour that, to observers from outside the industry, may appear bizarre or even illogical. They may include:
- Providing a product or service below what it costs to provide;
- Measuring growth using metrics that are not Generally Accepted Accounting Practices;
- Prioritizing data acquisition (e.g. a list of users, their personal information, etc.);
- Disregarding expenses and revenue when considering financials;
- Ignoring existing laws or regulations that counter the proposed business model;
This list is not exhaustive, but instead just a small collection of identifiable behaviours that point toward an infected host. One symptom by itself may not be enough for a proper diagnosis, but it certainly merits a closer inspection to ascertain if the condition exists.
The “ensh” parasite is not yet destructive to the host, as it usually is accompanied by a corresponding injection of financial capital. In fact, most people will likely find the results of these symptoms to be personally beneficial, because they can see how decisions such as those listed above could be to their benefit. The fever starts, but everyone is too caught-up in the novelty to notice.
As with many things, it’s amazing how money can prevent one from acting in one’s own self-interest.
Step 4: Metastasis
After infection, a host will begin to behave strangely, as the parasitic infection takes over leadership and the behaviour deviates from what would be recognized as a long-term sustainable business model. The focus is not on building something that has intrinsic value due to accumulation of assets or intellectual property, but instead on increasing the visibility and popularity of the product instead.
The host becomes increasingly detached from business reality, where revenue must exceed costs, and instead only focuses on a “valuation” process which influences public perception while simultaneously diluting the already-shaky foundation of providing value to customers. All efforts are now focused on getting acquired by a larger organization with a stronger infection.
Step 5: Submission
When a host submits to “ensh” it marks the terminal condition. This is usually at the moment an organization is “acquired” or purchased by a larger organization that also happens to be infected. Suddenly, the core value proposition that was the genesis of the entire process becomes obscured by things like Key Performance Indicators, needless layers of middle management, Personal Growth Plans, Quarterly Goals, and the kind of bureaucratic obstruction that prevents the large infected organization from having the ability to produce anything new in the first place. Atrophy of talent, passion, and enthusiasm.
This is when the “good” people at the organization (i.e. the ones who care about the customer) start to leave for new opportunities.
Step 6: Death
If it isn’t announced publicly, then it happens quietly in the background. A re-brand with a new name and logo. Ads. A “premium” version. An integration with other products owned by the same corporation. Additional features that are unrelated to the core concept. Even more ads. So many advertisements.
Revealing the Parasite
The parasite is composed of individuals who have one objective: extract as much money as possible. They may be willing to put money in first, in order to extract more in the future, but the end-game is always extraction. Building a company with the express goal of getting acquired by a larger corporation is a shell game, where the only winners are those with a controlling stake. It’s rarely the ones who built the value of the host organization who end up with the money; instead, it’s a class of individual who offers the promise of “investment” but the goal of single payday some time in the future, rather than a long-term partnership aimed at growing a sustainable model.
Also, it’s a shortening of the term “enshittification” originally coined by Cory Doctorow to describe the process by which tech companies die.
The Ensh are a category of investors who are the mosquitoes of the tech industry, spreading this infection of growth-at-all-costs mindset, and convincing founders to actively destroy what they’ve worked so hard to build. Just like some other mosquito-borne illnesses, it’s a problem that’s vast, distributed globally (but concentrated geographically), and sadly, humans are incredibly vulnerable.