9 ms·

The Data Factory – How Your Free Labor Lets Tech Giants Grow The Wealth Gap

65 points by ghosh 13y ago

deleted 13y ago
[deleted]
snowwrestler 13y ago
Facebook gets some of my data, but in return I get a free software platform that makes it easier than before to keep in touch with my friends and family. Like most of the U.S. economhy, it works because it is a free exchange in which both parties gain something. I could easily keep my data away from Facebook. But then I would not benefit from their services. I think the real issue is hidden in the article--opportunity today is incredibly rich for those who have the right education...which not everyone has. There are two issues here, actually. The first is whether our public education system is preparing youth to seize future opportunities. On the whole, I think the answer is at best mixed--but it seems solvable. We can improve our schools and make the students next year smarter than the year before. At least we have the concept of free public education as a platform. The second is what happens to adults who lost their industries? Can a 40-something factory worker or lumberjack learn how to create Android apps that generate revenue? The answer here seems a lot worse. Not only does it seem harder for middle aged folks to radically change their professions, there are no free, and few low-cost institutions helping them do it. Online schools like Khan Academy seem exciting, but are very far from being proven answers to this problem. There do seem to be openings in the middle--providing services to the educated people who can build moneymaking technologies. For example, I believe there continues to be a shortage in nurses nationwide. It's not easy to become a nurse or PA, but at least there are a lot of good community college programs for it.
- wffurr 13y ago
  Whenever you hear there's a "shortage" of a particular job, that usually just means wages are higher than the employers would like them to be. You can really think of that relationship either way around. e.g. – there's a huge shortage of butlers because they're just way too expensive. One way to compensate for the suffering caused by economic dislocation is to reduce the hardship of not having a job. More unemployment and welfare aid, with less degrading means testing would help. Better would be a basic income, with income earned from working always a bonus on top.
  - yummyfajitas 13y ago
    A shortage also often refers to an inability for employers to find someone they wish to hire, regardless of what the price is. I.e. I've interviewed a number of people in the past year or so. I only recommended hiring one of them.
    - rayiner 13y ago
      I'm sure there are some brilliant people working on Wall Street right now who'd be happy to come work for you at the right price.
    - chrisbennet 13y ago
      (Note: These questions are not meant to be snarky so please don't dog pile on the poster if he responds.) Can you tell me what sort of position was this for (developer, scientist, "unicorn"*, etc)? Were the parameters for this candidate search "find us someone regardless of price" or was there some notion of "market rate" attached to it?
  - snowwrestler 13y ago
    > Whenever you hear there's a "shortage" of a particular job, that usually just means wages are higher than the employers would like them to be. You can really think of that relationship either way around. e.g. – there's a huge shortage of butlers because they're just way too expensive. This sentiment comes from the idea that businesses facing a "shortage" can always hire good candidates by just raising their salaries. That is true, but it does not disprove a shortage--it just proves that good employees can be recruited from competitors if the wage is high enough. But if there actually is a shortage, all that does is move the shortage around. There's also the issue of what is a sustainable salary expense in a given industry. Sure Inova could staff up with top-notch nurses if it paid them all $300k per year. But then how much would they have to charge patients to stay in business? In the end, this a fun and easy argument to make because it requires no actual data about a given industry--just a preconception that businesses are cheap and manipulative. (Which they sometimes are--but again, that doesn't mean there's not a shortage.)
dirtyaura 13y ago
I watched Moritz's presentation yesterday, and I got a feeling that he has been actively thinking about the idea of data factories but he couldn't yet effectively convey the key insights. As a side note, this is very interesting that a VC that probably listens hundreds of pitches a year, is basically struggling with same issues that most of the founders: conveying your thinking in a crystallized form. As far as I understood, the key point of data factories is that they are a new paradigm for organizing work. Many aspects are pretty obvious to folks hanging out in HN. A few key differences to earlier models: companies don't anymore employ workers directly, but more and more act as mediators between consumers and producers. Distance between consumers and data factories is shorter than between consumers and traditional factories, which gives new, previously unseen efficiency to the feedback loop and allows data factories to direct their efforts (or efforts of 3rd party producers) better than - let's say - a traditional car manufacturer.
- chadwickthebold 13y ago
  Were you watching the same keynote? “It’s tough if you’re poor, it’s tough if you’re middle class. It means you have to have the right education to work at [the tech giants]. If you’re not like us, it’s tough The key point of data factories is that they are economically disenfranchising the vast majority of the population. The 'new paradigm' isn't for organizing work, its getting your consumers to do the work for you. If we weren't so wrapped up in the VC/HN/Web Tech echo chamber it would probably be easier to realize that this mode of economic growth is at best unsustainable and at worst destructive to the longterm health of a modern economy. It would be great for startups to focus less on social and ads and more on how technology can be leveraged to raise the living standards for everyone.
  - eli_gottlieb 13y ago
    Your message is a bitter pill for this site to swallow, but I do have to agree. If we look at "where are the jobs going", one large part is automation, yes. Another large part is "shadow work": work that was once done by a paid employee but is now shifted onto the customer. If forcing people off their ancestral lands to get them into factories was exploitation, how much more exploitative is it for business to lay off workers and then demand that paying customers do the actual labor? Why does anyone consider it acceptable to disemploy workers, exploit customers, and then call it "technology"?
rndmize 13y ago
> It’s not all bad, though. The tools and platforms listed above have given way to a “personal revolution” that’s delivered unprecedented productivity and reach to small businesses and entrepreneurs. You don’t need nearly as much money to start a business anymore. Moritz gave a slew of examples of people who made small fortunes selling sleds on Amazon, becoming makeup spokeswomen on YouTube, becoming best-selling authors via Kindle, or earning huge real estate commissions through Trulia. Its really too bad that this article lets slip a critical point here. Yes, you don't really need much money to start doing something these days; it doesn't take more than a computer and an internet connection to start making music, or writing books, or getting a youtube channel going, or selling stuff on eBay or Amazon or Etsy or whatever. But in all of these things, the wealth distribution is crap. I've heard the stories about the spectacular success of this writer or that one that sold an ebook on Amazon after being rejected by publishers and made millions of dollars, and its naturally never mentioned how many thousands or tens of thousands of people have tried doing exactly that and walked away with a pittance or nothing. It's no different from the millions of people that want to become actors, or singers, or whatever; most of them fail. A 1% or 5% or 10% chance at a big success is not a replacement for a stable, decently paying job for the vast majority of people. And things are only going to go farther in this direction. I honestly don't see a solution to this aside from basic income. More/free/better educational resources aren't going to change this problem. Teaching everyone programming (insert other currently stable/growing industry here) isn't going to change this problem. Heck, programmers already deal with this on the app markets; what percentage of apps/developers walk away with 90%/99%/99.9% of the revenue?
- AsymetricCom 13y ago
  The key though is that faster and cheaper tools for trying allows someone to fail faster, thus mitigating the impact of their failed potential career and allowing them to try or evolve faster. A lot of these tools are built on open source frameworks, but rely on the network effect for their staying power and financial momentum. You could do the distribution yourself, but you'll have to do it on the open internet, not on a "Internet of Things" that is supported by the walled garden purveyors. This isn't too difficult to do, but is obviously out of the scope of something a musician might attempt. What I'm getting at is that if they do charge too much, they'll end up undercut by some other media, unless they gain a "standard for enterprise" market saturation, then they can charge what they want since they own all the customers capable of buying your product. Since as soon as someone becomes "standard for anything", the NSA soon comes knocking at your door for a piece of your data pie, thus fueling the creation of yet more "gardens" until what end, I don't know.
crazygringo 13y ago
> "Instead, the data factories get free labor. They distribute what seem like useful services to the world, things like YouTube, Facebook, Twitter, LinkedIn, Etsy, or Kickstarter. ...earn tons of money for the tech giants without forcing them to do much work. That money stays concentrated around the data factories and their limited staff instead of distributing it like traditional factories." What? In what universe do the employees at YouTube or Facebook or Etsy "not do much work"? How do these only "seem" like useful services -- is somebody saying they're not? How do traditional factories "distribute money"? If Twitter is getting "free labor" please tell me how, so I can get in on it too. Sure, there's a shift towards concentration of wealth, but paragraphs like the above one make zero sense.
- eli_gottlieb 13y ago
  The idea is that YouTube doesn't do much work when compared with the people who actually make and upload all the videos. Which is a perfectly valid criticism. In absolute numbers, the amount of hours collectively put in by YouTube users to create content is much larger than the number put in by YouTube/Google employees to serve that content. Right now, however, there is basically very little actual negotiation between the platform provider and the content creator. The former gets the vast majority of all revenue; the latter mostly works for free. We consumers enjoy our free, ad-supported video site, but YouTube might as well just be the new record company (especially with the all the take-downs and region restrictions!).
  - jmillikin 13y ago
    > Right now, however, there is basically very little > actual negotiation between the platform provider and the > content creator. The former gets the vast majority of > all revenue; the latter mostly works for free. We > consumers enjoy our free, ad-supported video site The uploader decides whether a particular video has ads or not. According to http://allthingsd.com/20130304/youtubes-show-me-the-money-problem/ http://allthingsd.com/20130304/youtubes-show-me-the-money-pr... YouTube takes a 45% cut, which means the content creator ends up with the majority of the ad revenue.
wmf 13y ago
This topic is explored in more detail in Who Owns the Future? — it's a fascinating (if sobering) book. http://www.jaronlanier.com/futurewebresources.html http://www.jaronlanier.com/futurewebresources.html
stox 13y ago
Huh? "A single $800 Samsung Galaxy S4 has the same power as 375 IBM 3340 computers that cost a total of $33 million in 1973." The 3340 is a DASD ( direct attached storage device), not a computer. The big computer for IBM in 1973 would have been a 370/158.
- greenyoda 13y ago
  In fact, the 3340 disk drive was famous for introducing the "Winchester" technology: "In 1973, IBM introduced the IBM 3340 'Winchester' disk drive, the first significant commercial use of low mass and low load heads with lubricated platters. This technology and its derivatives remained the standard through 2011. Project head Kenneth Haughton named it after the Winchester 30-30 rifle because it was planned to have two 30 MB spindles; however, the actual product shipped with two spindles for data modules of either 35 MB or 70 MB. The name 'Winchester' and some derivatives are still common in some non-English speaking countries to generally refer to any hard disks (e.g. Hungary, Russia)."[1] Yes, 70 megabytes was the capacity of a mainframe-sized disk drive in those days. [1] https://en.wikipedia.org/wiki/History_of_hard_disk_drives#1950s.E2.80.931970s https://en.wikipedia.org/wiki/History_of_hard_disk_drives#19...
stephenaturner 13y ago
There's a lot of truth to this, but it's also a massive simplification -- and a strange effort to blame tech companies for something that started happening decades ago. Wage stagnation, growing unemployment and a decline in work started in the 70s -- well before most of these tech companies came on the scene (or had that much impact on the world). It seems to me that some people want to blame tech companies and new technology for something that's been a much wider effect across more platforms for a lot longer.
kenster07 13y ago
This issue is too complex to be summed up by the wealth gap. It presumes that wealth can be measured in money, when human happiness is increasingly becoming cheaper to acquire, and free in many cases. I don't think the author of the article appreciates all the economic forces at play. One thing we do have to think about is how the economy would have to adapt if the true cost to produce critical goods became zero. Capitalism's supply and demand theory will become inadequate in such a case.
yuhong 13y ago
Reminds me of an idea where a company trains people to be professional bloggers or similar, and in exchange a fixed salary is given.
Meekro 13y ago
Humans have been automating away labor in various ways for thousands of years. At one point, everyone would've had to devote most of their time to obtaining food -- now one guy (plus some farm equipment) can feed thousands. There are countless other examples industry-and-job-destroying innovations, and from a long-term historical standpoint they've always been a huge net win for humanity. And none of them required us to convert to socialism to prevent mass starvation. And yet, this time around, innovation is evil somehow if it results in labor being done by software rather than people? The essay alludes to global financial collapse, but doesn't explain how that's supposed to happen. Are we supposed to guess? Or, more likely, just feel general outrage at the 1% and not think too hard? He also claims that the minimum wage hasn't kept up with inflation. That's totally false -- the minimum wage in the U.S. was established in 1938 at $0.25/hr. That would be $4.14 in today's dollars, and we're at nearly double that!

65 points by ghosh 13y ago

deleted 13y ago

[deleted]

Facebook gets some of my data, but in return I get a free software platform that makes it easier than before to keep in touch with my friends and family. Like most of the U.S. economhy, it works because it is a free exchange in which both parties gain something. I could easily keep my data away from Facebook. But then I would not benefit from their services. I think the real issue is hidden in the article--opportunity today is incredibly rich for those who have the right education...which not everyone has. There are two issues here, actually. The first is whether our public education system is preparing youth to seize future opportunities. On the whole, I think the answer is at best mixed--but it seems solvable. We can improve our schools and make the students next year smarter than the year before. At least we have the concept of free public education as a platform. The second is what happens to adults who lost their industries? Can a 40-something factory worker or lumberjack learn how to create Android apps that generate revenue? The answer here seems a lot worse. Not only does it seem harder for middle aged folks to radically change their professions, there are no free, and few low-cost institutions helping them do it. Online schools like Khan Academy seem exciting, but are very far from being proven answers to this problem. There do seem to be openings in the middle--providing services to the educated people who can build moneymaking technologies. For example, I believe there continues to be a shortage in nurses nationwide. It's not easy to become a nurse or PA, but at least there are a lot of good community college programs for it.

wffurr 13y ago
Whenever you hear there's a "shortage" of a particular job, that usually just means wages are higher than the employers would like them to be. You can really think of that relationship either way around. e.g. – there's a huge shortage of butlers because they're just way too expensive. One way to compensate for the suffering caused by economic dislocation is to reduce the hardship of not having a job. More unemployment and welfare aid, with less degrading means testing would help. Better would be a basic income, with income earned from working always a bonus on top.
- yummyfajitas 13y ago
  A shortage also often refers to an inability for employers to find someone they wish to hire, regardless of what the price is. I.e. I've interviewed a number of people in the past year or so. I only recommended hiring one of them.
  - rayiner 13y ago
    I'm sure there are some brilliant people working on Wall Street right now who'd be happy to come work for you at the right price.
  - chrisbennet 13y ago
    (Note: These questions are not meant to be snarky so please don't dog pile on the poster if he responds.) Can you tell me what sort of position was this for (developer, scientist, "unicorn"*, etc)? Were the parameters for this candidate search "find us someone regardless of price" or was there some notion of "market rate" attached to it?
- snowwrestler 13y ago
  > Whenever you hear there's a "shortage" of a particular job, that usually just means wages are higher than the employers would like them to be. You can really think of that relationship either way around. e.g. – there's a huge shortage of butlers because they're just way too expensive. This sentiment comes from the idea that businesses facing a "shortage" can always hire good candidates by just raising their salaries. That is true, but it does not disprove a shortage--it just proves that good employees can be recruited from competitors if the wage is high enough. But if there actually is a shortage, all that does is move the shortage around. There's also the issue of what is a sustainable salary expense in a given industry. Sure Inova could staff up with top-notch nurses if it paid them all $300k per year. But then how much would they have to charge patients to stay in business? In the end, this a fun and easy argument to make because it requires no actual data about a given industry--just a preconception that businesses are cheap and manipulative. (Which they sometimes are--but again, that doesn't mean there's not a shortage.)

dirtyaura 13y ago

I watched Moritz's presentation yesterday, and I got a feeling that he has been actively thinking about the idea of data factories but he couldn't yet effectively convey the key insights. As a side note, this is very interesting that a VC that probably listens hundreds of pitches a year, is basically struggling with same issues that most of the founders: conveying your thinking in a crystallized form. As far as I understood, the key point of data factories is that they are a new paradigm for organizing work. Many aspects are pretty obvious to folks hanging out in HN. A few key differences to earlier models: companies don't anymore employ workers directly, but more and more act as mediators between consumers and producers. Distance between consumers and data factories is shorter than between consumers and traditional factories, which gives new, previously unseen efficiency to the feedback loop and allows data factories to direct their efforts (or efforts of 3rd party producers) better than - let's say - a traditional car manufacturer.

chadwickthebold 13y ago
Were you watching the same keynote? “It’s tough if you’re poor, it’s tough if you’re middle class. It means you have to have the right education to work at [the tech giants]. If you’re not like us, it’s tough The key point of data factories is that they are economically disenfranchising the vast majority of the population. The 'new paradigm' isn't for organizing work, its getting your consumers to do the work for you. If we weren't so wrapped up in the VC/HN/Web Tech echo chamber it would probably be easier to realize that this mode of economic growth is at best unsustainable and at worst destructive to the longterm health of a modern economy. It would be great for startups to focus less on social and ads and more on how technology can be leveraged to raise the living standards for everyone.
- eli_gottlieb 13y ago
  Your message is a bitter pill for this site to swallow, but I do have to agree. If we look at "where are the jobs going", one large part is automation, yes. Another large part is "shadow work": work that was once done by a paid employee but is now shifted onto the customer. If forcing people off their ancestral lands to get them into factories was exploitation, how much more exploitative is it for business to lay off workers and then demand that paying customers do the actual labor? Why does anyone consider it acceptable to disemploy workers, exploit customers, and then call it "technology"?

rndmize 13y ago

> It’s not all bad, though. The tools and platforms listed above have given way to a “personal revolution” that’s delivered unprecedented productivity and reach to small businesses and entrepreneurs. You don’t need nearly as much money to start a business anymore. Moritz gave a slew of examples of people who made small fortunes selling sleds on Amazon, becoming makeup spokeswomen on YouTube, becoming best-selling authors via Kindle, or earning huge real estate commissions through Trulia. Its really too bad that this article lets slip a critical point here. Yes, you don't really need much money to start doing something these days; it doesn't take more than a computer and an internet connection to start making music, or writing books, or getting a youtube channel going, or selling stuff on eBay or Amazon or Etsy or whatever. But in all of these things, the wealth distribution is crap. I've heard the stories about the spectacular success of this writer or that one that sold an ebook on Amazon after being rejected by publishers and made millions of dollars, and its naturally never mentioned how many thousands or tens of thousands of people have tried doing exactly that and walked away with a pittance or nothing. It's no different from the millions of people that want to become actors, or singers, or whatever; most of them fail. A 1% or 5% or 10% chance at a big success is not a replacement for a stable, decently paying job for the vast majority of people. And things are only going to go farther in this direction. I honestly don't see a solution to this aside from basic income. More/free/better educational resources aren't going to change this problem. Teaching everyone programming (insert other currently stable/growing industry here) isn't going to change this problem. Heck, programmers already deal with this on the app markets; what percentage of apps/developers walk away with 90%/99%/99.9% of the revenue?

AsymetricCom 13y ago
The key though is that faster and cheaper tools for trying allows someone to fail faster, thus mitigating the impact of their failed potential career and allowing them to try or evolve faster. A lot of these tools are built on open source frameworks, but rely on the network effect for their staying power and financial momentum. You could do the distribution yourself, but you'll have to do it on the open internet, not on a "Internet of Things" that is supported by the walled garden purveyors. This isn't too difficult to do, but is obviously out of the scope of something a musician might attempt. What I'm getting at is that if they do charge too much, they'll end up undercut by some other media, unless they gain a "standard for enterprise" market saturation, then they can charge what they want since they own all the customers capable of buying your product. Since as soon as someone becomes "standard for anything", the NSA soon comes knocking at your door for a piece of your data pie, thus fueling the creation of yet more "gardens" until what end, I don't know.

crazygringo 13y ago

> "Instead, the data factories get free labor. They distribute what seem like useful services to the world, things like YouTube, Facebook, Twitter, LinkedIn, Etsy, or Kickstarter. ...earn tons of money for the tech giants without forcing them to do much work. That money stays concentrated around the data factories and their limited staff instead of distributing it like traditional factories." What? In what universe do the employees at YouTube or Facebook or Etsy "not do much work"? How do these only "seem" like useful services -- is somebody saying they're not? How do traditional factories "distribute money"? If Twitter is getting "free labor" please tell me how, so I can get in on it too. Sure, there's a shift towards concentration of wealth, but paragraphs like the above one make zero sense.

eli_gottlieb 13y ago
The idea is that YouTube doesn't do much work when compared with the people who actually make and upload all the videos. Which is a perfectly valid criticism. In absolute numbers, the amount of hours collectively put in by YouTube users to create content is much larger than the number put in by YouTube/Google employees to serve that content. Right now, however, there is basically very little actual negotiation between the platform provider and the content creator. The former gets the vast majority of all revenue; the latter mostly works for free. We consumers enjoy our free, ad-supported video site, but YouTube might as well just be the new record company (especially with the all the take-downs and region restrictions!).
- jmillikin 13y ago
  > Right now, however, there is basically very little > actual negotiation between the platform provider and the > content creator. The former gets the vast majority of > all revenue; the latter mostly works for free. We > consumers enjoy our free, ad-supported video site The uploader decides whether a particular video has ads or not. According to http://allthingsd.com/20130304/youtubes-show-me-the-money-problem/ http://allthingsd.com/20130304/youtubes-show-me-the-money-pr... YouTube takes a 45% cut, which means the content creator ends up with the majority of the ad revenue.

wmf 13y ago

This topic is explored in more detail in Who Owns the Future? — it's a fascinating (if sobering) book. http://www.jaronlanier.com/futurewebresources.html http://www.jaronlanier.com/futurewebresources.html

stox 13y ago

Huh? "A single $800 Samsung Galaxy S4 has the same power as 375 IBM 3340 computers that cost a total of $33 million in 1973." The 3340 is a DASD ( direct attached storage device), not a computer. The big computer for IBM in 1973 would have been a 370/158.

greenyoda 13y ago
In fact, the 3340 disk drive was famous for introducing the "Winchester" technology: "In 1973, IBM introduced the IBM 3340 'Winchester' disk drive, the first significant commercial use of low mass and low load heads with lubricated platters. This technology and its derivatives remained the standard through 2011. Project head Kenneth Haughton named it after the Winchester 30-30 rifle because it was planned to have two 30 MB spindles; however, the actual product shipped with two spindles for data modules of either 35 MB or 70 MB. The name 'Winchester' and some derivatives are still common in some non-English speaking countries to generally refer to any hard disks (e.g. Hungary, Russia)."[1] Yes, 70 megabytes was the capacity of a mainframe-sized disk drive in those days. [1] https://en.wikipedia.org/wiki/History_of_hard_disk_drives#1950s.E2.80.931970s https://en.wikipedia.org/wiki/History_of_hard_disk_drives#19...

stephenaturner 13y ago

There's a lot of truth to this, but it's also a massive simplification -- and a strange effort to blame tech companies for something that started happening decades ago. Wage stagnation, growing unemployment and a decline in work started in the 70s -- well before most of these tech companies came on the scene (or had that much impact on the world). It seems to me that some people want to blame tech companies and new technology for something that's been a much wider effect across more platforms for a lot longer.

kenster07 13y ago

This issue is too complex to be summed up by the wealth gap. It presumes that wealth can be measured in money, when human happiness is increasingly becoming cheaper to acquire, and free in many cases. I don't think the author of the article appreciates all the economic forces at play. One thing we do have to think about is how the economy would have to adapt if the true cost to produce critical goods became zero. Capitalism's supply and demand theory will become inadequate in such a case.

yuhong 13y ago

Reminds me of an idea where a company trains people to be professional bloggers or similar, and in exchange a fixed salary is given.

Meekro 13y ago

Humans have been automating away labor in various ways for thousands of years. At one point, everyone would've had to devote most of their time to obtaining food -- now one guy (plus some farm equipment) can feed thousands. There are countless other examples industry-and-job-destroying innovations, and from a long-term historical standpoint they've always been a huge net win for humanity. And none of them required us to convert to socialism to prevent mass starvation. And yet, this time around, innovation is evil somehow if it results in labor being done by software rather than people? The essay alludes to global financial collapse, but doesn't explain how that's supposed to happen. Are we supposed to guess? Or, more likely, just feel general outrage at the 1% and not think too hard? He also claims that the minimum wage hasn't kept up with inflation. That's totally false -- the minimum wage in the U.S. was established in 1938 at $0.25/hr. That would be $4.14 in today's dollars, and we're at nearly double that!