Jeff Bezos has his shops, so now Mark Zuckerberg wants a whole town | John Naughton
Strange how history repeats itself. Amazon is following the model of Sears Roebuck, and Facebook seems to have taken a page out of a railroad tycoons book
The abiding problem with writing about digital technology is how to avoid what the sociologist Michael Mann calls the sociology of the last five minutes. Theres something about the technology that reduces our collective attention span to that of newts. This is how we wind up obsessing over the next iPhone, the travails of Uber, Facebook being weaponised by Russia, Samsungs new non-combustible smartphone and so on. Its mostly a breathless search for what Michael Lewis once called the new new thing.
We have become mesmerised by digital technology and by the companies that control and exploit it. Accordingly, we find it genuinely difficult to judge whether a particular development is really something new and unprecedented or just a contemporary variant on something that is much older.
As an example, consider Amazon, which has gone from online bookseller to the everything store (and a lot more besides). In the process, it has put a lot of bricks-and-mortar shops out of business; it turned out that books were just the gateway drug that got people used to the idea of shopping online. But in the last couple of years, Amazon has been opening shock, horror! bricks-and-mortar book stores. And now it has gone and bought Whole Foods Market, an upscale grocery chain, for $13.4bn and reduced some of its exorbitant prices by up to 43% on its first day under new management.
Whats going on? Wasnt the whole idea behind Amazon that it could be much more efficient (and reduce prices) by eliminating most of the costs of running a physical store? But if one takes a step back its possible to see a pattern here. Amazon (founded in 1994) is a creature of the web, which in turn is a creature of the internet. Broadband technology, the thing that brought high-speed connections to almost everyone in western countries, is a product of the first (1995-2000) internet boom, in which a lot of companies went bust building broadband infrastructure.
Spool back a century and you find that a similar boom-and-bust cycle left the United States with a transcontinental railway system. And one of the early creatures of that new infrastructure was a mail-order firm called Sears Roebuck. From the start, Sears marketed itself via its celebrated mail-order catalogue as an everything store. It used the same techniques as Amazon selling stuff at small margins, building huge warehouses to manage the formidable logistics of the business, etc. But then, after one of the most successful half-centuries in US corporate history, Sears did something extraordinary it opened a bricks-and-mortar store! The rest is history. Except that that history is sobering. At its peak, Sears had more than 3,500 stores. Now its down to fewer than 700. Once a world beater, its now an ageing follower of the pack.
Another interesting historical parallel is evoked by the news that Facebook plans to create a new urban settlement, described as an integrated, mixed-use village that will provide much needed services, housing and transit solutions as well as office space. Part of our vision is to create a neighbourhood centre that provides long-needed community services. We plan to build 125,000 square feet of new retail space, including a grocery store, pharmacy and additional community-facing retail.
What were beginning to see, in other words, is the revival of another old capitalist idea: the company town. Julianne Tveten, in a splendidly acerbic article, calls it Zucktown, after Facebooks founder, Mark Zuckerberg. It reminds her of another eponymous town Pullman in Illinois, the town created in 1884 by the railroad mogul George Pullman (and later absorbed into the city of Chicago).
He saw his creation, Tveten writes, as a lucrative, pro-business utopia filled with satisfied participants, employee and investor alike. Its veneer was indeed shiny: the amenities it promised yards [gardens], indoor plumbing, gas, trash removal were rare for industrial workers of the time, and its ultra-formal gardens and shopping centre, which equipped them with a barber shop, dentists offices, a bank and a slew of overpriced retail, offered a vanguard capitalists dabbling in luxury.
And now it turns out that Google is thinking along similar lines, as even its well-paid employees find Silicon Valley housing unaffordable. Marx was right about history repeating itself: were entering the farcical phase.