Cool tech and influencers

I suppose that I first came across the idea of a guru - an early form of influencer - when the Beatles got together with Maharishi Mahesh Yogi. It was a combination of flower power, transcendental meditation, yoga and chanting – mainly ‘Om’, although other chants are available.

What we probably weren’t then aware of was that, in his early years, Steve Jobs was himself, with a shaven head, also seeking enlightenment. He went to India in search of a guru. He was looking for a sort of counter-culture, something different to the American way of life.

The idea of a counter-culture can also be seen later on in his creation of computers very different to the rather dull Microsoft-based computers which dominated the market. The Apple computer had style, and was marketed not as a mere computer, but a desirable object in itself.

Any reasonable analysis will show that the computer itself was not exceptional, except in terms of the exceptionally high price demanded for it. Samsung phones quickly caught up with Apple phones in terms of functionality and also style. The latest Samsung folding version of their phone has gone beyond what is available from Apple and there are many other contenders out there at half the price.

But the Apple brand has been and is still presented as something apart. It is portrayed as having a spiritual quality, incarnated in its founding Guru, the very cool Steve Jobs, he of the black roll-neck jumper version of priestly garb: all, with access to software which will only work on its unique operating system, designed to keep Apple users ‘faithful’ to its products.

Apple is not alone in its success, however. Technology stocks are now a significant part of our world. Microsoft is one of the original tech companies and remains very profitable despite the rather dull image of Bill Gates during most of its existence. He is now, however, a philanthropist and so rather more cool, despite the accusation that he is responsible for injecting chips into us, along with a pretend Covid vaccine, in order to achieve world domination. In fact, he has already achieved something close to world domination with his suite of programs - Word, Excel and so on – and of course the Windows operating system. Because they are superb products? Well no, not really, but they have the benefit that they very early on established themselves as industry standards.

This means that IT departments everywhere know how to install the software, explain its use and resolve problems when they arise. Other software packages may do the same and be cheaper, but they strike fear into the hearts of their potential users and the IT departments because of their unfamiliarity. And the alternative software still has to produce documents in Word or Excel formats in order to be exchanged with others. So why use it at all, goes the thinking. And because investors do not see there being a significant risk that this will change anytime soon, they put a high valuation of Microsoft’s shares.

The exceedingly cool technology guru, Elon Musk, however, is not having a good time at the moment. The price of Tesla shares has dropped by 70% this year and since his takeover of Twitter, that too has gone down very substantially. Which is why he has ceded his place as the richest man in the world to the French boss of LVMH, Bernard Arnault. And for the longer term, it looks as though those share prices are unlikely to rise significantly.

Which brings us to the question of why Tesla was ever worth so much. As the Nobel prize-winning economist, Paul Krugman has said: “The answer, as best as I can tell, is that investors fell in love with a story line about a brilliant, cool innovator, despite the absence of a good argument about how this guy could found a long-lived money machine.” The company makes things and, although the quality is not exceptional, it’s not bad. But the lesson from Microsoft and Apple is that to be extremely profitable in the long run, a tech company needs to establish a market position that holds up even when the time comes that people aren’t all that excited about its products. Customers have to be tied in some way.

So what would make that happen for Tesla? With major auto manufacturers moving wholesale into the electric vehicle business, Tesla no longer has its USP. That ship has sailed. In short, electric vehicle production, just like its petrol-based predecessor, doesn’t look like a special case.

Of his other assets, Twitter, a platform he and many people still use because so many other people use it, could be a special case. But Twitter usage is apparently hard to monetize. The number of Twitter users has not diminished by very much but Musk appears set on driving away his real clientele, the advertisers. They now see Twitter as an ‘unsafe’ environment for their brands.  Musk, says that he is a freedom of speech absolutist. This means that he is willing to allow people to say what they want on Twitter, even former president Trump, hence the fright taken by the advertisers.

He has also indicated his support for republicanism, something which may have something to do with Tesla and its sales. Apparently his cars sell best amongst Democrats. Republicans tend to be sceptical about, amongst many other things, climate change and so see no point in going electric. Musk, as an online influencer in favour of MAGA, may be trying to increase the kerb appeal of his EVs amongst members of the Republican party. Being able to bend Twitter to his will - to allow right-wing extremists an uncensored voice - might just offer Tesla a significant economic advantage, despite the damage done in the short term to his fortunes.

And then there’s Bitcoin. Despite years of effort, nobody has yet managed to find any real use for cryptocurrency other than money laundering or paying for drugs. But prices have nonetheless soared because of all the hype, and are still being sustained by a hard-core group of true believers. And I use the word ‘believers’ deliberately. For there is an entire network of people working together to keep the idea going, rather than admitting that it is an obvious pyramid scheme.

Despite its lack of ability to produce an income, crypto currency influencers largely rely on FOMO - fear of missing out. Indeed, there is an entire set of acronyms which the faithful use, mostly emphasising the need to ‘hold’, ‘Hodl’ the currency, rather than cashing it in, in order, they hope, ultimately to sell it at astronomical prices. For this there is a need to support each other in the faith - ‘Wagmi’ – “we’re all going to make it”.

But that it is claimed to be a currency free from government control is also significant. Bitcoin influencers and holders seem mainly to be against governments exercising any control over their lives.

And then they see that Bitcoin has scarcity ‘value’. Only so many Bitcoins can be created. Unfortunately for that theory, anyone can create their own block-chain crypto-currency and there are quite a few of them on offer. So then it is clear that faith is an essential part of the enterprise.

And the ‘Whales’ – the big holders of Bitcoin? Guess what, Elon Musk is a major player and he frets at the government regulation to which he is subject. Unsurprisingly, he uses his public profile to provide influence in support of the whole philosophy behind crypto. He tells us that it’s what we should all invest in and definitely not engage in FUD – fear, uncertainty and doubt.

Of course, on the internet can be found so many other influencers mainly pedalling nonsense. They do not have to be tech experts or even  have their roots in Indian religious practices, although references to spirituality (along with asking their followers for 5 star reviews) are the norm. In order to get lots of advertising and sponsorship, they try to attract followers by any means possible. Many encourage their very gullible followers - sometimes many millions of them - to ignore established wisdom, encouraging instead conspiracy theories and a disbelief in the views of ‘experts’. They necessarily represent a counter-culture, because without that they would have no USP.

As we now have 8 billion people on planet earth, so many of them connected to the internet, persuading only a very tiny percentage of them to follow you can amount to a sufficiently large number to satisfy the advertisers and so provide the influencer with a steady stream of income...

My project for the new year?

Paul Buckingham

31 December 2022


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