When I received this book to review last summer, I was stunned at how prescient the premise is; for months thereafter the news became filled with reports of Facebook’s faults. I was worried for the author that by the time his book was published (today) he’d be reporting on old news. To the contrary, Roger McNamee’s book provides not only a solid foundation on which all our present worries exist, he delves deep into how the current conundrum of Facebook continues to trouble an ever-larger number of people.
McNamee was an early investor in Facebook, and became Zuckerberg’s mentor. It was McNamee who suggested Zuck hire SherylSandberg. When McNamee’s Facebook concerns grew, well before the 2016 US elections, he understandably believed his memo to Zuck and Sandberg would quickly spark a discussion. When all McNamee heard were crickets, he began to reach outside the company for a smell test to see if he was alone in his concerns. Far from being a lone wolf, McNamee was soon connected to a growing number of experts who shared their concerns.
Zucked traces the path McNamee took, and it is a fascinating journey whose destiny is presently unclear.
McNamee introduces how the underlying algorithms in Facebook appeal to our lizard brain with emotions such as fear and anger, which in turn induce us to spend more time on the platform, which is obviously more valuable to Facebook. The flywheel effect accounts for Facebook’s massive financial success.
But at the crux of McNamee’s concern is not just that Facebook is the most valuable company in the world, but that it is a profit maximizing business controlled by one person.
McNamee’s first job as an analyst at T. Rowe Price introduced him to Paul Allen, who shared an affinity for music and finance. Eventually McNamee left to form his own fund with John Powell and was in the room when Andreessen pitched Netscape, Bezos pitched Amazon and Google was pitched by Brin and Page.A fortuitous meeting with the more visible quarter of U2 eventually led to Bono’s idea to buy Universal Music Group, which evolved into McNamee leaving the fund he founded to start Elevation Partners with Bono.
After establishing his credentials, McNamee steps back and provides an eloquent history of how processing power, storage and network bandwidth each increased while becoming cheaper, enabling Web 2.0 to explode after the dot.com crash of 2000. With the attendant surplus of computer science and electrical engineers pouring out of colleges, a new business paradigm took shape. “Move fast and break things” was a mantra equal to “fail fast and often.” That led to hubris sufficient to embrace a paradigm of asking for forgiveness rather than permission. Giving away products for free mostly allowed start-ups to ignore criticism and privacy norms.
In that Silicon Valley stew brewed a growing libertarian mindset, currently causing consternation regardless of one’s political persuasion.
McNamee then posits that both the good and bad of social media can be traced to the “PayPal Mafia,” the team that started the company and cashed out immensely: Peter Thiel, Elon Musk, Reid Hoffman, Max Levchin and Jeremy Stoppleman.
That brain trust mindset underscored the fundamental nature of Facebook, which ignored the consequences of tribalism engendered by the platform.
Various iterations of Facebook (since its birth as a directory for Harvard students) in hindsight reveal the behavior modification and addiction features that were introduced. The like button was a crucial step in that direction; Facebook began to slice, dice and feed users only that which they prefer. Echo chambers, trolling and flaming followed. Our current divisiveness is the core of much societal angst, on a global scale.
As the inner mechanics of Facebook are explored by McNamee, various intriguing insights emerge. For instance, one designer states that “the space of true things is fixed, while the space of falsehoods can expand freely in any direction – false outcompetes true.”
Long before the explosive November 2018 NY Times article McNamee referred to Facebook’s strategy of deny, delay, deflect, dissemble.
Zynga is considered Facebook’s outsourced games division. Not only did Zynga’s 2009 FarmVille free game rake in hundreds of millions of dollars of in-game purchases, it more importantly leveraged social interaction by rewarding increased engagement among friends. Not only was Facebook increasing its user base, it was crucially expanding the time spent by each user. The game also revealed a key insight for Facebook: “giving third party developers access to friends lists would be a huge positive for Facebook’s business.”
That cavalier attitude related to user data flew in contravention of a consent decree Facebook had previously signed with the FTC, but Zuck preferred his mantra of moving fast and breaking all sorts of things.
And several years later, hello Cambridge Analytica, a company financed by Stephen Bannon.
The company was able to harvest lists from Facebook to match with US voter profiles. Thirty million matches were made, representing a staggering 13% of all eligible voters.
McNamee reminds us that “Cambridge Analytica had been Trump campaign’s primary advisor for digital operations and Facebook had embedded three employees in the Trump campaign to support that effort.”
Zucked really picks up steam when McNamee and colleagues go to Washington. Briefing elected officials on the nuances of Facebook’s behavior starts a torrent of awareness inside the Beltway. As the press picks up the story, a growing awareness seeps into the public’s consciousness.
Zuck’s grilling by elected officials pointed out the latter’s broad unfamiliarity with the platform. Senator Orrin Hatch infamously asked how Zuckerberg can sustain a business model “where customers don’t pay.” Democrats later in the five hour hearing were able to make Zuck squirm, but by then many viewers had turned away from the hearing to see what the FBI raid on Trump’s personal attorney’s office would reveal.
And Wall Street certainly did not care about any warning signs. The company’s quarterly earnings a few weeks later included profits rising by 63 percent. And that trend inexplicably continues, last week Facebook’s quarterly results exceeded Wall Street’s expectations: revenue hit $16.91 billion, up 30% from the same period a year ago.
McNamee is astute enough to point out the global conundrum of the user’s experience with Facebook: good for me, bad for society.
Sandberg does not escape McNamee’s focus as the crisis unfolds. He notes her superb ability to control her public image, but after the Cambridge Analytica explosion, she and Zuck remained hunkered down and released no response to the growing news drumbeat. When she finally emerged from the bunker, her performance was roundly criticized as hollow. “Where another executive might have leaned into the problem, taking a short-term hit in the hope of a long-term benefit, Sheryl had chosen to lean out.”
Other authors have written about some of the issues explored by McNamee. For instance, the alarm sounded by Jonathan Taplin in his insightful book has echoed loudly.
McNamee has used his firsthand role as an early investor in Facebook to focus tightly on one of the companies in Taplin’s crosshairs.
If one were to distill McNamee’s thoroughly persuasive thesis it would be “Facebook has managed to connect 2.2 billion people and drive them apart at the same time.”
Zucked: Waking Up to the Facebook Catastrophe, by Roger McNamee (Penguin Press)
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