When Bad Things Happen to Good Products
WHY YOU SHOULD CARE
Because entrepreneurs need to gamble, or new products and services will never emerge.
By Per Bylund
Per Bylund is assistant professor of entrepreneurship and Records-Johnston professor of free enterprise in the School of Entrepreneurship at Oklahoma State University.
When Mark Zuckerberg launched Facebook in 2004, the social networking service was relatively narrow in scope. Sure, it may have started with a “hot or not” game for Harvard undergrads called Facemash, but it quickly morphed into an online directory, complete with photos and basic biographical information, that allowed students to connect with one another.
The social media upstart’s initial user base was in the thousands, but it quickly ballooned. By the end of 2017, the social network had about 2.13 billion monthly active users. Everything appeared to be going swimmingly — until news broke that political consulting firm Cambridge Analytica had obtained data from 50 million Facebook users that it used to bolster President Donald Trump’s campaign during the 2016 election.
This fueled public outcry, serving as a catalyst for a mass exodus from the social network. Hordes of people and companies tried to eliminate their Facebook accounts, and the hashtag #DeleteFacebook took on a life of its own. Facebook’s stock tumbled, with the scandal eliminating nearly $50 billion of the firm’s market value.
Products and services being used in ways that inventors never intended happens more than you think.
The social media titan probably should have seen something like this coming, though Facebook executives have repeatedly argued that the network has become too large for them to police. But it’s important to remember that the company grew from a small startup to a massive corporation in only a few years and that the art of wooing venture capital has more to do with taking chances than being cautious — perhaps giving Zuckerberg & Co. incentives to take risks. But they probably never imagined the platform could be used in such an unusual (and questionable) manner.
Products and services being used in ways that inventors never intended happens more than you think. Entrepreneurs are so focused on running their businesses that they don’t consider having to defend themselves in a crisis. While the media and pundits seem to disagree, these entrepreneurs are under no obligation to justify their businesses. Zuckerberg, who’s testifying this week before the U.S. Senate about abuse of data, presumably didn’t start Facebook to exploit user data for political firms, but he was forced to defend his creation in the wake of public outcry.
The Drawbacks of a Narrow Focus
Entrepreneurs are masters of their respective industries. Just like becoming a violin maestro requires 10,000 hours of practice and near-complete focus on honing that skill, entrepreneurs need a deep understanding of their businesses. A narrow focus is key to success and provides a deep understanding of the customer, enabling innovations that truly satisfy the needs of a narrow market segment.
Still skeptical that a product can become an international pariah? Look no further than bump stocks, which Air Force veteran Jeremiah Cottle spent his life savings of $120,000 to develop. The rifle accessory, which uses a gun’s recoil to speed up fire rates, received approval from federal regulators and achieved sales of $10 million in its first year. Then, the Las Vegas massacre happened.
In the mass shooting, Stephen Paddock was reported to have used bump stocks, and suddenly, everyone from politicians to activists and even the National Rifle Association united around the idea of banning Cottle’s product. He and his company were thrown into the center of the national gun control debate.
Cottle understood his market, and he catered specifically to it like any entrepreneur should. Speaking with Ammoland in 2016, Cottle said he created bump stocks to provide a thrill to gun enthusiasts who craved a fully automatic experience but lacked the ability to afford those expensive weapons. “Some people like drag racing, some people like skiing, and some people, like me, love full auto,” Cottle said.
He developed a product designed to resolve a perceived problem and to provide value to potential customers. He applied his deep knowledge of the firearms industry to create his own lane in a crowded market. Just because Cottle designed a weapon accessory doesn’t correlate to him wishing it be used to murder people. Anything can be used in both good and bad ways. The development of technology that could harness the power of nuclear reactions, for instance, both enabled a vast source of carbon-free power and a powerful weapon of annihilation. Does that make nuclear power good or evil?
Farewell to Knee-Jerk Reactions
As much as they try, entrepreneurs cannot fully predict how their products will be used in the real world. Even something as well-meaning as autonomous vehicles or AI could be weaponized by ill-intentioned individuals. It is the context and the situation that make the crime — not the product itself.
Entrepreneurs might create a relatively benign product only to become the target of an angry mob a few months later. Considering that a recent PwC study found that 38 percent of CEOs feel like they don’t know what to do during a crisis, this rampant scapegoating is bad news for business. A fear of being the next to fall might prevent entrepreneurs from pursuing their passions, leading to reduced economic growth and a lower standard of living compared to where we theoretically could have been.
It’s important to note that entrepreneurs don’t typically pick an industry based on profitability. People who have experience and a specific expertise in a given field commonly notice opportunities to change things for the better, pursuing spinoff ventures in the same arena. If someone has been in the firearms industry for decades and has an idea for a product that solves a consumer pain point, should he or she be punished simply for working in the wrong field? In this scenario, everyone loses. Entrepreneurs grow less likely to chase their imaginations, and consumers miss out on new products.
We need to be more critical of moral panic campaigns and to stop the wildfire from spreading by refusing to fan the flames on social media and elsewhere. Society seems to have been infected by a serious belief in “guilt by association,” which is little more than a logical fallacy.
- Per Bylund, OZY Author Contact Per Bylund