Speaker 1: Welcome to Tech Stuff, a production of I Heart Radios
Speaker 1: How Stuff Works. Hey there, and welcome to tech Stuff.
Speaker 1: I'm your host, Jonathan Strickland. I'm an executive producer with
Speaker 1: I Heart Radio and I love all things tech, and
Speaker 1: today I thought I would explore something that's kind of
Speaker 1: related to technology and that you see it in tons
Speaker 1: of like tech startups and Silicon Valley. But if we're
Speaker 1: being honest, this topic actually goes well beyond tech. It's
Speaker 1: just that tech is one of those more visible places
Speaker 1: where it shows up. And it's the concept of fake
Speaker 1: it until you make it, which is a philosophy I
Speaker 1: personally find particularly distressing because it frequently does not turn
Speaker 1: out well for everybody involved. And I realized that this
Speaker 1: episode poses a very real danger of diving into grouchy
Speaker 1: old man complains about those young people terror worry. But
Speaker 1: believe me, that's not what I intend. And I don't
Speaker 1: even necessarily think it's the fault of young people, because,
Speaker 1: for one thing, folks like me and older we can
Speaker 1: fall prey to this type of thinking, and we do
Speaker 1: all the time. And for another, the very concept has
Speaker 1: been taking root for decades, so back when I was
Speaker 1: a young person. We were really starting to see this
Speaker 1: come to fruition already, So you can't blame it on
Speaker 1: the millennials, is what I'm really getting at. So what
Speaker 1: the heck am I talking about? Well, basically, you probably
Speaker 1: are familiar with the concept. The fake it until you
Speaker 1: make it strategy goes something like this. You come up
Speaker 1: with an idea and it's a really compelling idea. Maybe
Speaker 1: it's for a product or a service, maybe it's for
Speaker 1: an event you want to throw, but whatever it is,
Speaker 1: you think of it as really awesome idea and an
Speaker 1: idea for him, it is pretty darn cool. People agree
Speaker 1: with you, that's a great idea. But then to go
Speaker 1: beyond an idea, you're gonna need to take some big
Speaker 1: steps to actually create the product or the service or
Speaker 1: to throw the event or whatever it is. It's going
Speaker 1: to take a lot of effort, and it might require
Speaker 1: innovation and development in the tech sector, So if you're
Speaker 1: developing a product, a brand new product, or an underlying
Speaker 1: infrastructure to support a service or event, you're gonna have
Speaker 1: to innovate in that space, and it's going to take time,
Speaker 1: and it's going to take resources, and it might end
Speaker 1: up being really expensive, and of course we all know
Speaker 1: there's never a guarantee that an idea will actually work
Speaker 1: as you transition from the world of ideas to the
Speaker 1: world of reality, so that means that ideas also represent risk.
Speaker 1: There's a real risk that things are not going to
Speaker 1: work out. So maybe your idea is great on paper,
Speaker 1: but it turns out it's not practical in reality. Or
Speaker 1: maybe it turns out it's just a bit too fanciful
Speaker 1: and there's no real way to pull it off in
Speaker 1: the real world. Maybe your idea, you know, it sounds
Speaker 1: more like wishful thinking than a realistic idea, a realistic concept,
Speaker 1: or maybe it's possible, but it turns out it's going
Speaker 1: to take way longer to get to a point where
Speaker 1: you can actually make it happen, and it takes way
Speaker 1: longer than you had initially anticipated or projected. Now you
Speaker 1: won't know any of this for sure until you take
Speaker 1: on the challenge of making your idea a reality. But
Speaker 1: it's really impossible to estimate how big of an investment
Speaker 1: of your time, talent, and money it's going to require,
Speaker 1: or how much you might waste if it all goes
Speaker 1: belly up. It might be that you finally achieve your idea,
Speaker 1: but by the time you get there, the results you
Speaker 1: have don't justify the amount of effort it took to
Speaker 1: get to that point. We've seen tons of this sort
Speaker 1: of thing on crowdfunding campaigns where the concept was something
Speaker 1: that people really identified with, It resonated with the audience,
Speaker 1: and there was a huge support system thrown in, lots
Speaker 1: of money pouring in to make this idea reality. And
Speaker 1: then in the cases where something actually was made, sometimes
Speaker 1: it falls far short of where people expected, and in
Speaker 1: that case you could say, like, well, technically the idea
Speaker 1: became a reality, but it wasn't worth all the effort
Speaker 1: and money that went into making it happen in the
Speaker 1: first place. In worst case scenarios, you don't get anything
Speaker 1: at all. It all fails before you ever get anything.
Speaker 1: So chances are, unless you have direct access to considerable
Speaker 1: wealth and you don't mind the possibility of losing a
Speaker 1: good deal of it, you'll want to find other people
Speaker 1: to help make your idea become a reality. You're gonna
Speaker 1: need investors, and investors can be great. They can pour
Speaker 1: money into your project and fund your work to bring
Speaker 1: your idea to life. And when your idea is a
Speaker 1: smashing success, you can pay back your investors, which is
Speaker 1: totally cool because you'll continue to make money as your
Speaker 1: idea continues to kick but or maybe the idea doesn't
Speaker 1: pan out, and that's a bummer. But with investment comes risk.
Speaker 1: People understand that generally speaking, and so you've kind of
Speaker 1: mitigated the risk to yourself by spreading it among all
Speaker 1: your investors. And maybe you'll have to liquidate everything related
Speaker 1: to your idea in the worst case scenario, right, maybe
Speaker 1: you've created a little company to bring your idea to
Speaker 1: reality and it doesn't work out and you have to
Speaker 1: liquidate all your assets and give all that to your investors.
Speaker 1: But even then, really you're probably no worse off than
Speaker 1: you were before you got started, assuming you haven't done
Speaker 1: anything criminal like defraud investors and then got caught. So
Speaker 1: assuming everything was on the up and up, you're probably
Speaker 1: you know, back to square one, but you're not set
Speaker 1: back further than that. Now. Investors do expect results, but
Speaker 1: at times they can be pretty darn patient about it,
Speaker 1: and many might essentially be speculators. Right they're looking for
Speaker 1: a big payout and that could come in the form
Speaker 1: of a smashing success an idea that is truly remarkable
Speaker 1: and innovative and compelling, or it might come to fruition
Speaker 1: if some bigger fish out there sees you and your
Speaker 1: project and then offers to buy it up from you.
Speaker 1: A lot of startups actually operate in this way. They
Speaker 1: aren't trying to make a successful business so much as
Speaker 1: generate a ton of interest. Even if they don't have
Speaker 1: a means of generating revenue, they'll still try to generate interest,
Speaker 1: and the goal is to have some bigger entity like
Speaker 1: an Apple or an Amazon, or a Google or a Facebook,
Speaker 1: to have them come around and gobble up this smaller
Speaker 1: company for a princely sum. For a lot of folks,
Speaker 1: that is the dream. It's it's not necessarily making something
Speaker 1: that works. It's making an idea that some other company
Speaker 1: finds really really interesting and they'll pay you for it.
Speaker 1: And that means that you don't even necessarily have to
Speaker 1: make a thing that works. You just have to convince
Speaker 1: people that you know it's something they want to work.
Speaker 1: It's tricky, and this gets down to what I want
Speaker 1: to talk about today. A lot of people operate in
Speaker 1: a sort of holding pattern. They have come up with
Speaker 1: their idea, and it's possible that they sincerely believe they
Speaker 1: can bring it into reality if they have the right
Speaker 1: resources at their disposal. Maybe they realize right away that
Speaker 1: their idea is untenable. That can happen to You can
Speaker 1: have people who say, you know what, I don't think
Speaker 1: I can do this, but if I can convince other
Speaker 1: people that I can do it, that's good enough. Or
Speaker 1: you sometimes get people who from the very beginning they
Speaker 1: intended to fleece investors out of money. But whether their
Speaker 1: intentions are pure or otherwise, they tend to engage in
Speaker 1: the fake it until you make it strategy. And if
Speaker 1: it sounds like you are passionate and smart, people will
Speaker 1: give you way more slack and credit, then you'll have
Speaker 1: more opportunities to keep all the plates spinning at least
Speaker 1: a little while longer. So in the best case scenario,
Speaker 1: with sincere people, they can keep this process alive long
Speaker 1: enough to actually achieve their goal of bringing whatever their
Speaker 1: idea was to life. In a worst case scenario, people
Speaker 1: get caught in a disastrous situation in which they hurriedly
Speaker 1: seek out a way to get out of one catastrophe,
Speaker 1: typically by jumping into a different catastrophe um sort of
Speaker 1: the robbing Peter to pay Paul principle, This idea of
Speaker 1: you're constantly trying to hustle to get money to cover
Speaker 1: your last round of expenses, and that's what you're doing
Speaker 1: over and over again, rinse and repeat. You're never actually
Speaker 1: establishing a reliable way to generate revenue. You're just constantly
Speaker 1: trying to stay ahead of the creditors. Now, a big
Speaker 1: problem is that we've sort of mythologized the concept of
Speaker 1: a genius entrepreneur. In fact, this is something, especially in
Speaker 1: the United States, that has become iconic. Right Like, the
Speaker 1: United States has a history full of these mythological tales
Speaker 1: of various entrepreneurs and inventors, people like Thomas Edison or
Speaker 1: Tesla or Westinghouse, you know, people who who genuinely were
Speaker 1: very intelligent and very uh innovative and in the case
Speaker 1: of Westinghouse and Edison, particularly good at business. But we
Speaker 1: have since kind of elevated them to iconic status beyond
Speaker 1: what we would typically think of for a regular human being. Right. Well,
Speaker 1: that's a problem because we have created this sort of
Speaker 1: mythological ideal to aspire to that maybe doesn't really exist.
Speaker 1: But the whole concept is that we have an innovative,
Speaker 1: disruptive mind who comes into some existing industry and shakes
Speaker 1: everything up with a great idea that is in some
Speaker 1: way superior over the existing models. A lot of these
Speaker 1: thinkers tend to target specific industries with which we have
Speaker 1: a lot of for stration. So I'm going to give
Speaker 1: you an example with Uber. All right, So let's let's
Speaker 1: flash back a couple of decades. Let's say that you're
Speaker 1: visiting a place like New York City and you need
Speaker 1: to get around, and you're not familiar with the city.
Speaker 1: You're not familiar with the subway system, and that looks
Speaker 1: pretty intimidating to you. You don't know, like going down
Speaker 1: one says stairs, if you're going to be heading in
Speaker 1: the right direction or not. You definitely don't want to
Speaker 1: drive in the city because that looks like a heart
Speaker 1: attack on four wheels. So you take taxis to get around.
Speaker 1: But that experience might be less than ideal in some situations.
Speaker 1: So maybe you're dealing with rude drivers, or maybe you're
Speaker 1: left wondering if the driver was taking a long roundabout
Speaker 1: way to your destination in an effort to drive up
Speaker 1: the fair a few bucks. Maybe the driver spends a
Speaker 1: lot of time trying to discourage you from using a
Speaker 1: credit card and instead that you should pay with cash.
Speaker 1: That has happened to me on numerous occasions in taxi
Speaker 1: cabs in New York City. Maybe you just didn't feel
Speaker 1: safe with the person for whatever reason. But on the
Speaker 1: other hand, the taxis are pretty much the only game
Speaker 1: in town at that point. You definitely wouldn't want to
Speaker 1: jump into the car of some random driver who's offering rides.
Speaker 1: A cab at least provides you with a feeling that
Speaker 1: someone out there is managing all this stuff. There's some
Speaker 1: overriding authority that has authorized this person to drive a cab,
Speaker 1: and therefore things probably won't go too wrong. You know,
Speaker 1: there's some comfort that there's a body that is regulating
Speaker 1: this kind of stuff. Right. It's not necessarily a great experience,
Speaker 1: but that's what you have to work with. But then
Speaker 1: someone comes up with the idea of using a mobile
Speaker 1: app on phones to connect riders with drivers, and the
Speaker 1: app can search for all available drivers who are registered
Speaker 1: with the service within a certain area. It can calculate
Speaker 1: which of those drivers would be most likely to get
Speaker 1: to the passenger. First, it could contact a small group
Speaker 1: of them with the prospect of a ride. The drivers
Speaker 1: could accept that job request and then header on over
Speaker 1: your way to pick you up. The premise is that
Speaker 1: this cuts down on wait times, particularly for people who
Speaker 1: otherwise would just be standing on the side of the
Speaker 1: street waiting for the next cab to pass by and
Speaker 1: try to hail that cab with no guarantee that the
Speaker 1: cab is actually gonna stop. Like you're you're limited to
Speaker 1: which cabs you can see in the traditional cab hailing situation.
Speaker 1: That has since changed, by the way, but we're comparing
Speaker 1: the app version to the traditional taxi cabs situation or experience.
Speaker 1: So this app also goes a step further. It facilitates
Speaker 1: payment from the rider to the service, and then the
Speaker 1: service pays a percentage of the fair out to the driver.
Speaker 1: The service access is sort of dispatch and a cashier
Speaker 1: all at once. Money need never needs to change hands
Speaker 1: directly between the passenger and the driver. What's more, the
Speaker 1: app can display a map for both the driver and
Speaker 1: the passenger, so the person riding in the car can
Speaker 1: be certain that the driver isn't going on some sort
Speaker 1: of wild goose chase that can actually allow along. Moreover,
Speaker 1: the service allows people to become drivers without having to
Speaker 1: overcome the hurdles that taxi cab drivers must manage in
Speaker 1: order to operate a cab legally. So in New York City,
Speaker 1: there are a limited number of taxi licenses, so there's
Speaker 1: always a cap on how many people can actually operate
Speaker 1: a taxi cab legally in the city. These licenses are
Speaker 1: called medallions, and medallions can be bought and sold, and
Speaker 1: new ones can be issued by the city and then
Speaker 1: auctioned off by regional authorities to potential taxi cab operators.
Speaker 1: But the limited number means there's a hard cap on
Speaker 1: the number of cars that are licensed to operate as
Speaker 1: taxi cabs. This is a model that a lot of
Speaker 1: other cities have followed. This makes it easier to regulate
Speaker 1: the taxi industry and to try and affect other connected
Speaker 1: issues like traffic congestion or pollution and more. Means that
Speaker 1: if you limit the number of cars that can be taxis,
Speaker 1: then you don't have to worry as much about taxis
Speaker 1: fluttering up city streets and generating a lot of pollution.
Speaker 1: But it also means people who might be fully qualified
Speaker 1: and who might be genuinely awesome. Taxi cab drivers, if
Speaker 1: they got the chance, can't break into the system because
Speaker 1: they can't get a medallion. Now, there are other requirements
Speaker 1: that some cities have that make it even harder to
Speaker 1: become a driver. So, for instance, to drive a black
Speaker 1: cab in London, a driver must first show that they
Speaker 1: possess the knowledge. That's an actual term. The knowledge means
Speaker 1: that they know the layout of all the city streets
Speaker 1: in London and essentially that they can get anywhere from
Speaker 1: anywhere without the use of a GPS. So that's impressive
Speaker 1: and it usually takes a couple of years and it's
Speaker 1: another big barrier to entry. But see here the app
Speaker 1: version side steps all that right because you have a
Speaker 1: GPS with the app, And in addition, passengers can assign
Speaker 1: a rating to their driver, which can let future passengers
Speaker 1: know if that driver is someone they want to ride with.
Speaker 1: You can also tell the service if a driver is
Speaker 1: being a problem and that person can be removed from
Speaker 1: the loop entirely. Drivers can also rate passengers, which has
Speaker 1: a similar effect, but behind the scenes. So in other words,
Speaker 1: the promise of the service is to eliminate many of
Speaker 1: the frustrations and concerns associated with the entrenched taxi industry.
Speaker 1: It disrupts it. The company positions the app to be disruptive.
Speaker 1: It's taking aim and an antiquated system by the argument
Speaker 1: of the app that a lot of people find inconvenient
Speaker 1: or irritating or maybe even predatory. It democratizes the service
Speaker 1: across a wide range of drivers. So what's not to love. Well,
Speaker 1: the taxi drivers don't love it. They've gone through the
Speaker 1: processes and overcome the hurdles to operate a cab legally,
Speaker 1: and to get undercut by a quote unquote disruptive service
Speaker 1: is a pretty big blow. On the positive side for customers,
Speaker 1: it is meant that a lot of taxi companies have
Speaker 1: adopted many of the features found in apps like Uber,
Speaker 1: such as using an app to hail a ride and
Speaker 1: seeing where a driver is in relation to where you
Speaker 1: are on the app, and tracking your trip in real
Speaker 1: time in the vehicle, things that make people feel better
Speaker 1: about taking a taxi. You could argue a lot of
Speaker 1: those things only exist because the competition from services like
Speaker 1: Uber forced the hands of taxi companies to adopt them,
Speaker 1: and we should also remember that some of the regulations
Speaker 1: in place, they aren't just red tape. That's not just
Speaker 1: bureaucracy for bureaucracy's sake. Some are genuinely intended to ensure
Speaker 1: passenger safety and to act as a control mechanism for
Speaker 1: traffic congestion and pollution and stuff. The entry of an
Speaker 1: unregulated fleet of drivers behaving like taxi cab operators throws
Speaker 1: all of that into the garbage. But more germaine to
Speaker 1: this discussion is that the revenue model just isn't working.
Speaker 1: Uber loses money, a lot of money. In the second
Speaker 1: quarter of two thousand nineteen, Uber reported revenues of three
Speaker 1: point one seven billion dollars. That's billion with a B. Now,
Speaker 1: that's most assuredly a princely sum. Heck might bump that
Speaker 1: up to an imperial sum. However, it's not as much
Speaker 1: money as the company lost in that same quarter. So
Speaker 1: while they made three billion bucks, the company posted losses
Speaker 1: to the tune of five point two four billion dollars. Yawsa.
Speaker 1: So they are losing money way faster than they are
Speaker 1: making money now. To be fair, according to Uber, part
Speaker 1: of what made the losses so big that quarter was
Speaker 1: that the company was buying backstocks from employees as part
Speaker 1: of a compensation plan after Uber went public with an
Speaker 1: I p O. But analysts said, even if you took
Speaker 1: that out of consideration, the company still lost one point
Speaker 1: three billion dollars that quarter, and that it was a
Speaker 1: thirty percent increase in losses from the quarter before. That's
Speaker 1: not a great story. It's a downding amount of money. Now,
Speaker 1: speaking of money, we need to earn a little ourselves.
Speaker 1: So we're going to take a quick break. When I
Speaker 1: come back, I'll talk more about uber strategy and the
Speaker 1: challenges the company faces. Right, I'm back. So, how the
Speaker 1: heck can Uber stay in business if it costs more
Speaker 1: to operate then the company can generate in revenue. Well,
Speaker 1: I'm glad you asked, because this is where we get
Speaker 1: into some really messed up stuff about fake it until
Speaker 1: you make it. So Uber has managed to keep going
Speaker 1: mainly through getting investments into the company. More money gets
Speaker 1: poured into Uber by people who are hoping to receive
Speaker 1: a big payout in the future, or there are people
Speaker 1: who hope to guide the company by essentially purchasing enough
Speaker 1: voting shares to make a big impact. A question that
Speaker 1: naturally arises with this revelation is how long can at
Speaker 1: keep going on? How long will it be before investors
Speaker 1: worry that the money they're putting into the company is
Speaker 1: never going to come back to them. Because if that
Speaker 1: day should come and Uber still can't operate as a
Speaker 1: profitable business, the company is doomed because it will eventually
Speaker 1: burn through all the money it has and it will
Speaker 1: have to fold. And by the way, while I'm talking
Speaker 1: specifically about Uber, no right hailing service out there has
Speaker 1: proven to be profitable yet it's just Uber has been
Speaker 1: spectacularly unprofitable. So one path Uber might try and take
Speaker 1: is to dominate the market right swoop into a region,
Speaker 1: undercut competitors, gain customers, build customer loyalty, and then when
Speaker 1: competition has been starved out because Uber is undercutting everybody else,
Speaker 1: then you can hike up prices so that the company
Speaker 1: is making money on a per ride basis instead of
Speaker 1: losing money. That might be what has guided some pretty
Speaker 1: darn cutthroat maneuvers on Uber's part in the past, but
Speaker 1: really it's a race against the threat of bankruptcy, whether
Speaker 1: or not you can do enough to defeat your competition
Speaker 1: and become the only game in town before you run
Speaker 1: out of money. Another path is for Uber to get
Speaker 1: involved in a lot more segments of the transportation sector,
Speaker 1: which is stuff we've been seeing recently, and stuff with
Speaker 1: like a food delivery. But there are a ton of
Speaker 1: competing companies in those spaces too, which makes it really
Speaker 1: hard for any one company to dominate the market, let
Speaker 1: alone and industry. So while we're left with is a
Speaker 1: company that's trying to stay ahead of existential threats while
Speaker 1: establishing a profitable business model. And the technology side works.
Speaker 1: The apps function as they are meant to, They match
Speaker 1: up drivers and writers, they facilitate payments, but the business
Speaker 1: model underneath it is flawed. I don't think anyone is
Speaker 1: questioning how services like Uber can be useful to the
Speaker 1: end customer, but the other issues stuff like underpaid drivers
Speaker 1: who struggled to be wreck ignized as employees at all,
Speaker 1: traffic pollution, safety concerns, or there was a recent story
Speaker 1: about Uber in London about how customers had been matched
Speaker 1: up with a driver only to have a totally different
Speaker 1: driver be the one to pick them up fourteen thousand times.
Speaker 1: That ain't great if you're hoping to be sure that
Speaker 1: the person who's picking you up has a good rating. Anyway,
Speaker 1: these things raise a lot of red flags. Meanwhile, Uber
Speaker 1: and other ride hailing companies keep making aggressive moves in
Speaker 1: an effort to build a sturdy foundation, and no one's
Speaker 1: totally sure if they can actually do it, so they're
Speaker 1: faking it until they make it or until it breaks them.
Speaker 1: So how about we transition over to a quick rundown
Speaker 1: of a different event, a true event in that it
Speaker 1: was eventful. I'm talking about the Fire Festival, which made
Speaker 1: headlines in two thousand seventeen. So again, depending upon the
Speaker 1: account you believe, the Fire Festival was they're a sincere
Speaker 1: attempt to throw a really luxurious music festival on an
Speaker 1: island in the Bahamas, or it was a total money
Speaker 1: making scam from the beginning. Now, the pitch was that
Speaker 1: attendees would get a truly first rate experience with astounding
Speaker 1: accommodations like the stuff you would see in travel magazines,
Speaker 1: and the festival would feature top notch talent and enough
Speaker 1: Instagram were the experiences to propel even the most modest
Speaker 1: social media socialite into total influencer status, or again, it
Speaker 1: was just a scam from the very beginning. Now, personally,
Speaker 1: I'm more inclined to think that it was something that
Speaker 1: a few folks were convinced they would be able to
Speaker 1: do because they had no appreciation of their own limitations
Speaker 1: nor of the magnitude of the task they had set
Speaker 1: out for themselves. So they overestimated their own abilities and
Speaker 1: they underestimated how much work it would take to pull
Speaker 1: something like this off. Now, there are a couple of
Speaker 1: documentaries about the whole fiasco, and they're well worth watching.
Speaker 1: And I'm not going to go through all of it here,
Speaker 1: because they did a great job of it. You should
Speaker 1: go see those documentaries. But basically, a guy named Billy
Speaker 1: McFarland and some of his associates came up with this
Speaker 1: concept and they identified things that young, affluent people would
Speaker 1: find really appealing. They really knew which buttons to push
Speaker 1: to get people excited. Uh. Namely, they aimed at stuff
Speaker 1: that millennials tend to value. And yes, these are gross generalizations,
Speaker 1: and I do not mean to suggest that everyone who
Speaker 1: falls into the age range of millennial feels the same way.
Speaker 1: And to be more precise, these guys were specifically targeting
Speaker 1: wealthy millennials in particular, So here are some of the
Speaker 1: things they identified as being important. These young people really
Speaker 1: value experiences, so crafting and experience would tap into this
Speaker 1: millennial desire to be part of something unique or special.
Speaker 1: So not only did it have to be an experience,
Speaker 1: but exclusivity was an important concept. Millennials that they were
Speaker 1: targeting really like to feel that they're part of an
Speaker 1: exclusive group that get to experience something that not everyone
Speaker 1: else gets to do. And on top of that, these
Speaker 1: millennials valued the appearance of having an amazing experience. In fact,
Speaker 1: you could argue the appearance of having an amazing experience
Speaker 1: is the most important part of it, not the experience itself.
Speaker 1: And here's where we get on a Jonathan rant. So
Speaker 1: what I mean by the appearance of an experience is
Speaker 1: that there's a lot of value placed in the perception
Speaker 1: of a person as framed by their social media presence.
Speaker 1: And hey, I'm subject to this too, I'm not immune.
Speaker 1: If I take five selfies of me standing in front
Speaker 1: of like a statue or something, I'm gonna pick the
Speaker 1: one that I think is the best to share with
Speaker 1: social I'll probably skip the ones where I'm in the
Speaker 1: middle of a sneeze. Or something. Though honestly, that sounds
Speaker 1: like it's way more on brand for me, So maybe
Speaker 1: I would, and I'll why I hate using the phrase
Speaker 1: on brand for me. It's terrible anyway. In this sense,
Speaker 1: an experience becomes more like a backdrop for an amazing
Speaker 1: video or an amazing selfie. The goal is to convey
Speaker 1: that the millennial is in the middle of something truly
Speaker 1: special and incredible. It doesn't necessarily have to be incredible,
Speaker 1: it just has to look incredible. And there have been
Speaker 1: a ton of folks who have created installations like pop
Speaker 1: up experiences just for this purpose. This is stuff that's
Speaker 1: all meant to be a backdrop for selfies. These installations
Speaker 1: aren't necessarily an experience in of themselves, as in, there'd
Speaker 1: be little point in going through them if you weren't
Speaker 1: taking a camera with yourself and taking photos every three feet.
Speaker 1: They offer nothing more than that. And so really, what
Speaker 1: is happening is that the millennials are creating a visual
Speaker 1: record of them going through an overall empty and meaningless
Speaker 1: experience in order to give off the appearance of something more.
Speaker 1: I don't know, more and more, you know, I see
Speaker 1: these pop up museums that cater to this all the time,
Speaker 1: and hey, I'm not saying there's anything wrong with taking
Speaker 1: a pretty photograph or an amazing selfie. I think that's
Speaker 1: pretty awesome. But there's no real differentiation in these pop
Speaker 1: up things between artificial photography backdrops and actual real experiences.
Speaker 1: They're equating the two, so that kind of cheapens the
Speaker 1: value of a real experience. To me, at least, most
Speaker 1: of these pop up museums would be entirely forgettable if
Speaker 1: not for the images and video captured in the place.
Speaker 1: So in other words, if you were to walk through
Speaker 1: one without a camera, you would walk out having felt
Speaker 1: no real impact of that, and within a couple of
Speaker 1: days you probably wouldn't even think about it ever. Again,
Speaker 1: compare that to an experience where you develop a deep
Speaker 1: emotional or intellectual connection with something and experience that you
Speaker 1: might talk about for years to come because the way
Speaker 1: it affected you. That's a big difference. But in the
Speaker 1: world of social media, they end up being treated the same. Okay, So,
Speaker 1: knowing that these rich kids are super image conscious and
Speaker 1: experience oriented and really eager to be part of exclusive
Speaker 1: clubs and groups, McFarland and his partners began to make
Speaker 1: some grandiose promises. Now my guess is they figured they'd
Speaker 1: make enough money to actually pull off the event. They
Speaker 1: were describing that if you just wanted it badly enough right,
Speaker 1: things would just fall into place. It was kind of
Speaker 1: like the secret you put it on the universe, it's
Speaker 1: going to come back to you. Well, that's sort of
Speaker 1: wishful thinking can really set you up for massive problems,
Speaker 1: and McFarland found that out the hard way. McFarland starts
Speaker 1: getting massive interest in his festival and that he says
Speaker 1: he's going to throw and orders start pouring in, people
Speaker 1: start buying up tickets and booking up flights. But it
Speaker 1: seems as though no one had actually done a real
Speaker 1: honest assessment of what would take to actually put this
Speaker 1: event together. Heck, even something as important as selecting the
Speaker 1: site didn't really happen until after the pitch had already
Speaker 1: gone out. The initial site that McFarland had selected didn't
Speaker 1: work out. The story about why varies from person to person,
Speaker 1: but it didn't work out. So for a while, the
Speaker 1: festival was being promoted, but there wasn't actually a place
Speaker 1: for it to happen yet. So they were scrambling to
Speaker 1: find a suitable location for it. This is like saying,
Speaker 1: wouldn't it be cool to have a big music festival
Speaker 1: with huge stars performing in front of crystal blue ocean
Speaker 1: water on white sand beaches, and you've got a luxury
Speaker 1: villa to go back to after you're done partying for
Speaker 1: the night. Well, the answer to that would be heck, yeah,
Speaker 1: I'd be amazing. But just because something would be amazing
Speaker 1: doesn't make mean that it's a possibility. That's the important part.
Speaker 1: So where's the tech angle in this story? Why am
Speaker 1: I even bringing up Well, part of the reason for
Speaker 1: the Fire Festival was to serve as a big advertising
Speaker 1: camp pain for an app that McFarland's company was working on.
Speaker 1: It was also called Fire. The app was meant to
Speaker 1: help people book entertainment for events, like big name entertainers.
Speaker 1: So in theory, if you were organizing an event, you
Speaker 1: could choose a few different entertainers that who had registered
Speaker 1: with this app, and you would pitch it to them
Speaker 1: and see if they had any interest in being part
Speaker 1: of it. Then the entertainers could use the app and
Speaker 1: look at the various pitches coming in and decide whether
Speaker 1: or not they wanted to go any further. Presumably Fire
Speaker 1: would make money once the two parties came together in
Speaker 1: some form of agreement. Now, I guess you could think
Speaker 1: of it as tender, but for booking bands to play
Speaker 1: bar Mitzvah's or whatever. More importantly, the story illustrates that
Speaker 1: fake it until you make it can be truly destructive.
Speaker 1: McFarland and his associates were playing a shell game. They
Speaker 1: were moving money around like crazy in an effort to
Speaker 1: just stay ahead of total disaster. But unlike a company
Speaker 1: like Uber, McFarland had an actual deadline where stuff either
Speaker 1: had to come together or the whole thing was gonna
Speaker 1: go bust. Uber's deadline is undefined. It's just whenever the
Speaker 1: money runs out. If it ever does run out, McFarland
Speaker 1: had a date associated with the festival and things did
Speaker 1: not come together. This was I fake it until you
Speaker 1: break it situation. So in case you didn't know, the
Speaker 1: entire festival was a total disaster. Musical artists who were
Speaker 1: announced for the festival canceled. At least one act claimed
Speaker 1: that there never was an agreement to actually appear at
Speaker 1: the festival in the first place, that nothing was ever
Speaker 1: signed and that they were being promoted as being part
Speaker 1: of this festival without an actual signed agreement in place.
Speaker 1: The site wasn't prepared for the arrival of hundreds of attendees.
Speaker 1: There were inadequate toilet facilities, the food situation was dire,
Speaker 1: and a lot of folks tried to head right back
Speaker 1: to the airport to get a flight out as soon
Speaker 1: as they learned about the conditions. It was beyond a
Speaker 1: huge mess. Now, I think that actually ties back into
Speaker 1: my rant about real experiences versus the appearance of experiences.
Speaker 1: There's a strong impulse that we have to present a
Speaker 1: particular vision of ourselves to the world through our social
Speaker 1: media right because in real life, people can see us
Speaker 1: for both our virtues and our flaws. They can see
Speaker 1: us at our best, they can see us at our worst.
Speaker 1: It's a raw feed, that's what real life is. But
Speaker 1: with social media, we can craft that experience, we can
Speaker 1: cultivate it. We can present to the world an image
Speaker 1: of ourselves that reflects part of who we are, but
Speaker 1: leaves out all the stuff we'd rather folks not notice.
Speaker 1: We can be the person we want to be as
Speaker 1: opposed to the person we actually are, so it allows
Speaker 1: us to create a fantasy and present it as reality.
Speaker 1: Fake it until you make it follows a similar line
Speaker 1: of thought. You present the fantasy, in this case, your idea,
Speaker 1: as if it were a reality. And sure, there may
Speaker 1: be some hurdles between you and your goal, but those
Speaker 1: aren't insurmountable. You'll you'll be able to get over them
Speaker 1: right without too much trouble. Then you'll be sitting pretty
Speaker 1: and more importantly, to your investors, they all get filthy
Speaker 1: rich because man, it's such a good idea. Now, personally,
Speaker 1: I find that to be a pretty toxic way of
Speaker 1: looking at the world. It definitely doesn't set you up
Speaker 1: for success. It creates an incredibly stressful environment, assuming you're
Speaker 1: at all sincere with your wish to create something real.
Speaker 1: I mean, I guess if you're on the prowl for
Speaker 1: a mark, the only stress you have is that you
Speaker 1: want to avoid getting caught out for as long as
Speaker 1: you can. So if you're the dishonest type, you might
Speaker 1: not sweat the pressure too much because you're never intended
Speaker 1: to deliver upon your promise in the first place. But
Speaker 1: if you are on the verge of getting into serious
Speaker 1: legal trouble, you know, like McFarland did. You might start
Speaker 1: feeling the pressure then, but wait, it gets worse. I'll
Speaker 1: explain more after we take a quick break. All right,
Speaker 1: So I talked about fake it until you make it
Speaker 1: strategies with stuff like ride hailing companies and social events,
Speaker 1: but it also applies to stuff like the dot com
Speaker 1: bubble of two thousand and two thousand one. This is
Speaker 1: what I was saying earlier about how this fake it
Speaker 1: until you make it philosophy. It's not new, and it's
Speaker 1: certainly not new in tech. We've seen it for a
Speaker 1: long time, and I've covered the bubble in previous episodes.
Speaker 1: But here's the really quick version. As more people became
Speaker 1: aware that the Internet was a thing like the general
Speaker 1: public that started to happen in the early to mid nineties.
Speaker 1: People also recognize that there could be some legitimate use
Speaker 1: cases for business online. The Internet would enable an unprecedented
Speaker 1: explosion and goods and services. Online shopping was poised to
Speaker 1: become the new norm, replacing old brick and mortar experiences entirely,
Speaker 1: and tons of people wanted in on what appeared to
Speaker 1: be a cash cow. The Internet was essentially the gold
Speaker 1: Rush for the nineties. Everyone felt they needed to stake
Speaker 1: acclaim there. Companies that were directly tied to the Internet,
Speaker 1: like Netscape Communications Corporation would go public and they would
Speaker 1: see their share prices skyrocket, and that made early investors
Speaker 1: a ton of money. That just encouraged a lot of
Speaker 1: people to take big risks and invest in various Internet
Speaker 1: related companies because the payolts were so potentially huge that
Speaker 1: it seemed like you would be missing out if you
Speaker 1: didn't get in on the ground floor and invest in
Speaker 1: some of these startups. And looking at some companies, you
Speaker 1: could see how there was a very compelling motivation behind that.
Speaker 1: I mean, if you had bought Apple stock when it
Speaker 1: was at its lowest, you'd be a you know you
Speaker 1: you'd see a truly massive return on that investment if
Speaker 1: you had held onto it till today. And greed is
Speaker 1: a very powerful motivator. So you had a ton of
Speaker 1: entrepreneurs starting up dot com businesses, You had a bunch
Speaker 1: of investors eager to back the horse that would pull
Speaker 1: in those law shot odds. That set the ground for
Speaker 1: rampant speculation as people just poured way too much money
Speaker 1: into these startup companies. Many of these companies had not
Speaker 1: yet formulated a business plan that could lead to profitable operation.
Speaker 1: In fact, I suspect more than a few of them
Speaker 1: didn't have any real business plan to speak of. They
Speaker 1: just had an idea of how to use the Internet,
Speaker 1: which may or may not have had any merit. Some
Speaker 1: were geared towards a compelling idea, but had no real
Speaker 1: way to monetize that idea. Much of the dot com
Speaker 1: industry was firmly in the fake it until you make
Speaker 1: it camp. I think, generally speaking, that most of the
Speaker 1: entrepreneurs really believed that those initial investments would propel the
Speaker 1: start up with such momentum that it would overcome any
Speaker 1: challenges in the way and then establish itself as a
Speaker 1: legitimate business. Of course, some others were more concerned with
Speaker 1: spending that sweet venture capital on stuff like swanky offices
Speaker 1: and luxuries. Again, it was like it was the appearance
Speaker 1: of running a business was good enough to you know,
Speaker 1: run a business like. It didn't matter if you actually
Speaker 1: knew how to do it. You just had to look
Speaker 1: like you knew how to do it, and then everything
Speaker 1: would work itself out. A very naive approach. Now, since
Speaker 1: many of these companies had big overhead costs and a
Speaker 1: limited means of generating revenue. I mean a lot of
Speaker 1: these companies would end up having warehouse space, which is
Speaker 1: an ongoing expense you have to pay to stay in business,
Speaker 1: but would have a very poor revenue model. Well that's
Speaker 1: not something you can sustain forever. They were burning through
Speaker 1: money really fast. Now, it wasn't uncommon around this time
Speaker 1: for employees to get a lot of their compensation in
Speaker 1: the form of company shares. The idea was that the
Speaker 1: company would establish itself and become successful and the people
Speaker 1: responsible for doing the work would get rewarded, which sounds great,
Speaker 1: but that premise depends upon the company being successful. If
Speaker 1: it's not, then you have employees who are left with
Speaker 1: stock that isn't worth the paper it's printed on, or
Speaker 1: the storage space it occupies if it's all digital. A
Speaker 1: combination of factors led to a failure in confidence among investors,
Speaker 1: and soon the dot com industry was in free fall
Speaker 1: as everyone was pulling their money out, Some companies, like
Speaker 1: Amazon were able to survive through good luck and good timing.
Speaker 1: Amazon had managed to secure a very large investment not
Speaker 1: long before the market tanked, and through that investment they
Speaker 1: were able to ride it out, but a lot of
Speaker 1: companies withered away entirely and the economy overall suffered as
Speaker 1: a result. For a more recent example of fake it
Speaker 1: until you make it, we can look at Thoranos, the
Speaker 1: company that Elizabeth Holmes founded, or Thoropness. I guess I
Speaker 1: should say, because it's therapy, so it's thoroughness. Her goal
Speaker 1: was to build a machine of running a battery of
Speaker 1: more than one hundred different blood tests using a single
Speaker 1: small blood sample. And you would just use a tiny
Speaker 1: little drop of blood and this device would run tests
Speaker 1: and you could screen yourself for potentially hundreds of diseases.
Speaker 1: Homes stated that it was going to democratize medicine. It
Speaker 1: would give people more power over their own health information.
Speaker 1: It would inform them so they could have better discussions
Speaker 1: with their doctors about their health. And the blood testing
Speaker 1: market was essentially dominated by just a pair of companies,
Speaker 1: just two companies. And that gets back to that narrative
Speaker 1: that a lot of investors really love the idea of
Speaker 1: a new player coming into disrupt and otherwise established system.
Speaker 1: Combined that with the promise of a device that could
Speaker 1: in a matter of hours tell you more information than
Speaker 1: either of those companies could do over the course of
Speaker 1: weeks and using a much smaller blood sample to boot,
Speaker 1: you had a really compelling pitch. Of course, you'd want
Speaker 1: a machine that could do all these things, because who
Speaker 1: wouldn't It would be an amazing benefit to all of humanity.
Speaker 1: You could save lives, you could extend accessibility to people
Speaker 1: who otherwise would be unserved by the health care industry.
Speaker 1: It was the biggest pot of gold at the end
Speaker 1: of the sparkliest rainbow. But of course, to do it
Speaker 1: first you would have to develop the technology and then
Speaker 1: prove that it works. And as it turns out, that
Speaker 1: was a pretty darn big request and much harder than
Speaker 1: Holmes seemed to believe it was. By the way, to
Speaker 1: this day, I am not sure if she was sincere
Speaker 1: in her beliefs that she could pull this off, or
Speaker 1: if she was deceiving everyone, perhaps even including herself, or
Speaker 1: what the situation was now. On the one hand, I
Speaker 1: can forgive some naivete when it comes to technology, because
Speaker 1: technology can do some pretty amazing things. When we talk
Speaker 1: about concepts like Moore's law, and we're essentially saying, hey,
Speaker 1: every two years, computers are gonna be twice as powerful
Speaker 1: as they were two years earlier. Because that's the way
Speaker 1: it is, and that's the way it always has been.
Speaker 1: It's the way it's always going to be. Well, we
Speaker 1: set the stage for us to believe stuff that might
Speaker 1: be a little further out on the fringes, and there
Speaker 1: are a lot of people would argue that even Moore's
Speaker 1: law is coming to its end, but then that's an
Speaker 1: argument that's been made numerous times. So I'm able to
Speaker 1: walk around the world right with what amounts to a
Speaker 1: computer in my pocket. I can access enormous libraries of
Speaker 1: information in an instant through a touch interface. If I
Speaker 1: don't know how to do something, I can pull up
Speaker 1: a video explaining it to me in a heartbeat. Technology
Speaker 1: can transform what used to be impossible into a mundane experience.
Speaker 1: Like the things I'm telling you right now, they aren't special.
Speaker 1: We can all do them with a smartphone or a
Speaker 1: computer or a tablet. It's not like I have some
Speaker 1: magical ability. This is something that we all do every day.
Speaker 1: So I definitely can understand how some people would say, well,
Speaker 1: of course, of course, this is a technological challenge we
Speaker 1: can overcome. We can obviously make some sort of device
Speaker 1: that can do hundreds of blood tests on a single
Speaker 1: drop of blood. That's how investors saw it. The promise
Speaker 1: was so compelling, the benefits would be so enormous to humanity,
Speaker 1: and the profitability of such a technology would be incalculable.
Speaker 1: Investors would inject the startup with around seven hundred million
Speaker 1: dollars in cash. But as anyone who has followed the
Speaker 1: story of of uh Paraos knows, it was a challenge
Speaker 1: that the team could not overcome. Stories broke that the
Speaker 1: company was actually relying upon the very same testing equipment
Speaker 1: created by the competitors that Paraos was meant to disrupt.
Speaker 1: That their team of engineers were working really hard, but
Speaker 1: they had not yet figured out how they could actually
Speaker 1: deliver upon the promise that Holmes had made to her investors. Heck,
Speaker 1: they weren't even sure if it would ever be possible
Speaker 1: based on those parameters. The technology they had developed was
Speaker 1: limited and had issues, and never received FDA approval for
Speaker 1: the majority of the tests it was supposed to be
Speaker 1: able to do, which is probably a good thing, since
Speaker 1: it reportedly could not do most of them. What may
Speaker 1: have happened is that Holmes set her goal based on
Speaker 1: wishful thinking, and that her hope was to use investment
Speaker 1: money to bootstrap the technology and the company so they
Speaker 1: could actually deliver upon the promises being made, that the
Speaker 1: money would give them the security they need to actually
Speaker 1: develop the technology they they wanted to make. Unfortunately, for her,
Speaker 1: and for all the people working for Sarah Nous and
Speaker 1: for all the patients who are dependent upon the company
Speaker 1: providing results to them that were reliable, none of it
Speaker 1: panned out. Now, I've only picked a few examples to
Speaker 1: kind of talk about this fake it until you make
Speaker 1: it trend in the tech business, but trust me, there
Speaker 1: are countless others. There are cases where the technology works
Speaker 1: just fine, like with Uber, but the underlying business model doesn't,
Speaker 1: and in there are cases like Tharohns, where the tech
Speaker 1: itself falls far short of where it needs to be.
Speaker 1: The unifying factor is that these entrepreneurs have to keep
Speaker 1: things moving, or at least appearing to move, in order
Speaker 1: to keep the money coming in to support the overall
Speaker 1: organization until it can actually deliver upon its promise, and
Speaker 1: sometimes that just never happens. Honestly, what this reminds me
Speaker 1: most of out of every experience I've ever had in
Speaker 1: my life is theater. And I don't just mean putting
Speaker 1: on a performance for an audience. I mean theater in
Speaker 1: the sense that if you go to a theatrical production,
Speaker 1: you're looking at a set, and the set looks a
Speaker 1: very specific way, dependent upon the set designer and their
Speaker 1: talents and the people they had, you know, at their disposal.
Speaker 1: So let's say you're going to see a really elaborate set.
Speaker 1: It looks amazing, looks incredible to your eyes. Chances are
Speaker 1: that from the other side, from backstage, that set looks
Speaker 1: like nothing. It looks like cardboard and wood and nails
Speaker 1: and screws poking out at odd angles that you've got
Speaker 1: to watch out for. If you're crossing behind the stage.
Speaker 1: It doesn't look like anything because it doesn't need to.
Speaker 1: The audience doesn't see that part. The only part that
Speaker 1: matters is the part the audience sees. Well, I feel like,
Speaker 1: fake it till you make it is the same thing.
Speaker 1: The only thing that matters is what the investors see.
Speaker 1: And it can be fine for the backstage stuff to
Speaker 1: be messy, because as long as you can keep things
Speaker 1: going long enough so that you can deliver something that
Speaker 1: looks like the set that all the investors were watching
Speaker 1: during the whole production. You're good to go. The problem
Speaker 1: is when you can't do that. Now. I'm all for innovation,
Speaker 1: I'm even for disruption in many cases, but I'm also
Speaker 1: an advocate for critical thinking. Anyone who's listened to this
Speaker 1: show for a long time knows that far too many
Speaker 1: big decisions seem to be based upon people wanting a
Speaker 1: certain idea to be real and practical without any real
Speaker 1: evidence that those ideas can stand up in the real world.
Speaker 1: And while for some people, misplaced trust might mean you
Speaker 1: lose some money, like you know what, that's a that's
Speaker 1: an inconvenient it's terrible, but you can always make more money, right,
Speaker 1: But for other people the consequences can be much more
Speaker 1: life death oriented. So once again I appeal to you guys,
Speaker 1: my listeners, to develop critical thinking skills and to exercise
Speaker 1: them whenever you can. Now, one other thing I want
Speaker 1: to mention if you want to go out there and
Speaker 1: do uh pop up experience to take selfies, go and
Speaker 1: do it, you know, just do it. If it makes
Speaker 1: you happy, that's awesome. If you're going with friends and
Speaker 1: you're all having laughs and you're all enjoying yourselves. That's
Speaker 1: great and the world can use more joy. So go
Speaker 1: do that thing. I'm not trying to shame you. If
Speaker 1: it's something you genuinely have fun doing, you should do it.
Speaker 1: I know I've criticized the whole trend in this episode,
Speaker 1: but that's because I see so many people elevating it
Speaker 1: beyond what it actually is. I don't think there's anything
Speaker 1: inherently wrong about wanting to take a good selfie. I
Speaker 1: just don't think anyone should consider that as an experience
Speaker 1: in of itself. To do so means you're missing out
Speaker 1: on some legitimate experiences out there, and some of them
Speaker 1: are pretty incredible. All right, I'm done. I'm ready to
Speaker 1: go outside. Yell at a passing cloud y'all take care.
Speaker 1: If you have any suggestions for future episodes of tech Stuff,
Speaker 1: you can send me an email the addresses tech stuff
Speaker 1: at how stuff works dot com, or drop me a
Speaker 1: line on Facebook or Twitter. That's text stuff h s
Speaker 1: W can started off by saying, hey, they're grouchy pants
Speaker 1: and follow it with your message. Also, don't forget you
Speaker 1: can go to our website that's tech Stuff podcast dot com.
Speaker 1: That's where you're gonna find an archive of every episode
Speaker 1: we've ever published. You also find a link to our
Speaker 1: online store, where every purchase you make goes to help
Speaker 1: the show, and we greatly appreciate it, and I'll talk
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