Why Silicon Valley’s “We Know Better” mindset burns cash but creates little real value
We often see tech entrepreneurs as pioneers who make the world a better place to live. But we could also see them as a bunch of irresponsible, childish nerds burning through billions on their pricey toys—money that could’ve saved thousands of lives.
Silicon Valley’s mindset is not creating great products for customers. It’s building stuff that seems cool to its creators – and then convincing everyone else to buy it.
Burning $400.000 an hour
This startup burned $1.75 billion in six months, or about $400.000 an hour, and shut down. It was Quibi.
In 2020, it promised to transform the way people are entertained. But today, its name is a synonym for failure.
Quibi tried to build a shortform video streaming service to allow users to watch videos on the go.
The Verge found 11 reasons why Quibi failed, but I’d like to quote reason #10: “I can not stress this enough: Quibi didn’t work because no one at Quibi knew what it should be, what people wanted, or how people use their phones. Its entire existence is predicated on the idea that people want high-quality shortform content every single day, but executives arrogantly failed to acknowledge the simple point that people have routinely been getting that, for free, for years.”
In fact, the same thing happens in many startups, but not every one of them gets $1.75 billion. They’re trying to solve the right problem—but in the wrong way.
They don’t know better
If I were to come up with a Silicon Valley motto, it would be “We Know Better.”
Steve Jobs said: “Some people say, “Give the customers what they want.” But that’s not my approach. Our job is to figure out what they’re going to want before they do.”
Jeff Bezos wrote: “Market research doesn’t help.”
Satya Nadella stated: “Our industry does not respect tradition. What it respects is innovation.”
In other words, we shouldn’t ask customers what they need; we should tell them what they need.
In its famous 1984 Super Bowl ad, Apple cast itself as the liberator from tyranny. But take it from someone who was born in a totalitarian country: only people who think like tyrants believe they know better than you what you need.
That trademark tech world arrogance might have been justified 20 years ago, back when it was regularly delivering real miracles like the Internet, e-commerce, smartphones, and social media.
Does the industry keep on fascinating us? Not so much. Just look at these articles:
- Self-checkouts don’t live up to expectations.
- The Verge columnist tries to find a reason to wear the latest Meta’s Ray-Ban smart glasses – and fails.
- Amazon is closing its Amazon Go stores.
- AI investors should worry about the self-driving car crash, Bloomberg warns.
- Anthropic, the Claude AI chatbot maker, doesn’t allow applicants to use AI to fill in its “why do you want to work here?” box and submit cover letters.
- Meta is about to close its Metaverse project.
- People aren’t happy with many of the features automakers add to the cars.
- Christopher Mims, tech columnist at The WSJ, admits that many of his predictions didn’t come true.
- Only 8% of customers want to use chatbots during customer service interactions.
- Spotify creates fake artists to increase profitability.
So, do they know better?
Twenty years ago, tech bros promised us that the world would become a much better place. And they did keep their promise – but only for themselves.
They told us that websites would identify us and show us only relevant ads – well, it didn’t happen. I keep marking ads as irrelevant on Facebook, but they pop up again and again.
Amazon recommends products I’ve already bought and asks for review before the order arrives. Who needs two kettles in a month? As I was writing this, my Amazon order arrived—with the book I’d just bought in English. Five minutes later, they sent me an email in which they offered me the same book in German.
Absurd. My cat is smarter.
Volkswagen ditches touch controls for physical buttons after customer backlash. VW design chief Andreas Mindt told reporters, “Honestly, it’s a car. It’s not a phone.” Who would’ve thought? A groundbreaking insight for an auto executive, right?
GM invested $9 billion in its robotaxi business, Cruise, but shut it down in December. Meta has already invested $46 billion in Metaverse. How many lives could this money save?
AI looks very promising, but the technology is still in its infancy. As Meta’s AI chief Yann LeCun said, a house cat is smarter than the best LLMs.
You could say this is a fair price for technological progress. Thomas Edison failed many times before he patented the light bulb in 1879.
But there is a big difference between Thomas Edison and Elon Musk or Mary Barra, the CEO of General Motors.
We don’t need more tech. We need more human focus
When a new technology emerges, entrepreneurs first use it to replace or improve everyday routines.
Typewriters –> Word processors
Postal mail –> Email
Shopping –> E-commerce
Landlines –> Mobile phones
In-person chats –> Online chats and social networks
Projector slides → PowerPoint slides
If a new version of an old routine is easy to use, intuitive, and affordable, it takes off.
At this stage, non-techies like Steve Jobs or Jeff Bezos often succeed the most.
They bridge the gap between tech and customer needs.
But then four things happen:
[1] Most simple tasks are already automated. Customers have what they need and don’t ask for more. There are other routines to automate but they require more complex solutions. [2] Techies run the show because they know how to create complex solutions. But techies know little about people, that’s why they became techies in the first place. [3] Technology is still not good enough for such complex solutions. No one needs a driverless car that drives worse than a human, or dumb AI. [4] Investors demand the next big thing.At this stage, talking fridges, Metaverse, Meta smart glasses, Amazon Go, Apple Vision Pro, consumer 3D printers that one can use at home, driverless cars, and other devices that deliver zero value emerge.
And guess who pays for all this stuff in the end.
At this stage, half-baked solutions like dumb chatbots or not-so-smart speakers flood the market – years before they can actually do what they’re supposed to.
When scientists conduct research, they follow nature, trying to discover its laws and apply them in practice. But tech CEOs aren’t scientists. They use technology they neither developed nor discovered to build products.
And they believe they know better than anyone else what product to build.
The ‘We Know Better’ mindset has given birth to hundreds of dead-on-arrival products. Do you think that Quibi is an exception? Just look at this list of products created but then killed by Google.
Tech leaders have hundreds of tools at their disposal to understand user needs, yet they stubbornly believe that innovation is like art—where the creator follows pure intuition.
If they were right, we’d live in a much better world full of user-friendly products and reliable services.
But tech bros will never stoop to listening to their customers.
School bullying as a source of inspiration
Tech industry traditions were shaped by young men who felt more comfortable coding than talking to people.
At school, Jobs, Musk, and Huang got bullied. Bezos, Gates, and Zuckerberg were the classic nerds. For them, computers were an escape—a safe haven from the outside world.
They dreamed of space travel and looked up to lone-wolf heroes from sci-fi books.
They, and the generations of tech guys who came after them, believe in the creative power of the solitary mind.
Building products based on customer feedback? That’s for the weak. Real visionaries invent cool stuff in the quiet of their garages.
So far, investors love them and forgive them for their expensive failures. But things are changing. Investors are getting more demanding, and the ‘throw stuff at the wall and see what sticks’ approach is on its way out.
Steve Jobs said: “People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”
He was a natural marketer and genius but had no idea what customer research is. Those who ask their customers questions like “What do you want?” aren’t smarter than Amazon’s AI (which is dumber than my cat).
Jobs also said: “I think Henry Ford once said, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!'”
He didn’t even realize that customers had already given Ford the right answer, but the key word was ‘faster,’ not ‘horse.’
Things were on the paper, but he just refused to read them.
So, if you don’t have $1.75 billion to burn, go talk to your customers.
Svyatoslav Biryulin
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I help businesses scale fast by creating new markets. Do you need expert guidance to craft a winning strategy for your business? DM me.
Read also: Unlock Hidden Profit: Your Value Chain Goes Beyond Customers
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