A few months ago I got a pitch from a company that offered some sort of “last mile” to computer vision – an always-on human network that would take images that computers couldn’t identify and spit back if it was a tile or not was broken or if a signature matched.
I asked questions about how much money these workers would make per hour – and the founder gave me a line about how they are paid by task rather than by the hour. Obviously, he knew how long the workers would sit there, how many pictures they were likely to see, and he could do the simple arithmetic to get an hourly rate. I called him and pressed until I got an answer.
“Ten dollars an hour.”
“So what if the Democrats take back Congress and we hit a national minimum wage of $ 15 an hour?”
“On the second thought – forget about the political strategy that goes with it. How about – do you think that is a livable wage in this country? That’s less than $ 20,000 a year. “
He had no answer on morals, but he had said they had to recalculate the financial part. He was sure he had the leeway to cover it. Perhaps one day he would think about what it meant to pay someone so little.
I suggested reading Nickled and Dimed in America.
Then I started asking questions about what content these workers would be exposed to – and whether they would enter into contracts that would force people to watch child pornography all day, for example. The founder just said they would deal with it.
I suggested that it might be worth doing a statement now to protect workers before they are tempted in the future by a big Facebook contract that limits this type of exposure or some type of mental health options offers.
“No other VC has asked such questions.”
They had raised nearly $ 2 million in venture capital to hire an army of workers whose job it was to stare mindlessly at pictures all day, and no one asked about working conditions or whether the existence of this company and similar companies had costly social consequences.
I was both horrified and not at all surprised.
Similarly, I just got a pitch for a startup that offers telemedicine access that specializes in allergies – which I was pretty excited about, until they told me that pharmaceutical companies are paying for their marketing.
Granted, the doctors weren’t paid directly by the drug companies to offer allergy medication – but the companies knew perfectly well that the DNA of this company was guiding people on the way to a prescription and paying for customer contacts in the online clinic they would increase their own sales in the process.
It’s not like this clinic offers a wide range of holistic allergy control solutions, including nutritional support or organic compounds something Patients would simply have to take the pharmaceutical route. The entire clinic was focused on treating people, and the drug companies were happy to prime the pump.
I passed because I believe this is a blatant conflict that runs counter to the best interests of consumers. You shouldn’t be attending a strategy meeting where there’s growing evidence that some other measures are better for consumers, but you don’t want to pan because the pharma people are paying for your traffic.
It did not matter, as there would be full talk for the round.
Should this matter to venture capitalists? Aren’t we all here just for the money?
Well, it’s pretty hard to make money when the long-term consequences of your investments threaten the free and open democracy that underpins our society.
That would probably feel like an extreme statement – until last week.
On Wednesday, domestic terrorists, at least partially radicalized on one-off venture capital-backed platforms such as Facebook, Youtube, Twitch and Twitter, stormed the U.S. Capitol Building to halt the vote count and dismiss the election results.
How many years did VCs continue to put money into these companies before there was ever a “what if” boardroom meeting? Have there ever been such discussions at board level?
Better still, how sure are you that the investors behind the big social media and content platforms will insist on better politics going forward? Does your previous experience with Clubhouse give you a lot of confidence that lessons have been learned?
Should Robinhood have serious discussions about whether its app will create a bubble in Tesla stock – a bubble that could stall a number of retail investors? Should Coinbase be asking such questions about Bitcoin? Should Tiktok be wondering what role it plays in the sexualization of young girls?
Last year I went to a National Venture Capital Association dinner where the organization’s president, Bobby Franklin, talked about all the great things our lobby group did for VCs – like maintaining our interest income tax gap. You know the one where our investment income is taxed at a lower tax rate than the income earned by a primary school teacher.
I raised my hand and talked about – how maybe we as an industry could do better to narrow the gap between rich and poor – without exacerbating it with any special tax treatment or being a bit more aware of what happens to the jobs that we automate out of existence. I also mentioned how we built many of these companies on the back of workers who had no health insurance or OSH – because they were “gig economy” workers. That was before Prop 22 was over.
I didn’t even use technology to enable hate speech and disinformation – what Silicon Valley libertarians will argue is a “free speech” issue without even understanding the fundamentals of screaming fire in a crowded theater analogy.
I spoke out on these issues … at a table with VCs.
You can imagine the reaction.
I pride myself on being an industry that invests in ambitious people who want to start big companies that will employ many people in the future – but I don’t think we should allow the fact that there are some of the biggest growth companies in the US or have venture-backed the idea that these companies we fund could potentially be better participants and contributors to society.
People always told me that as an investor I shouldn’t share my political opinions publicly as it could affect my portfolio companies or my ability to raise capital. However, if political events lead to violence, death and repression, sharing your comment is not about a political point of view, but about sharing your values - and I believe the best founders will want to know where you stand.
Do I believe private companies should be able to eradicate hate speech and incitement to violence on their platforms? Absolutely.
First of all, it is morally right to care about people, society, etc. and the “do no harm” idea.
But second, it only makes the product better. More people will be using YouTube if they don’t have to worry that it’s a dead end street of hatred. More advertisers will be comfortable spending money on it. More women and the BIPOC community will use social networks if they are not harassed. Roblox is going to have a very nice IPO one day if there isn’t a huge problem with hate speech on its platform.
Some investors who are rewriting the history of innovation. They forget that taxpayers funded the creation of the internet and contributed to pharmaceutical discoveries. They are calling for the end of regulations, except for those encouraging them to invest through tax breaks that ordinary people don’t get. They want the government to get off their backs except when it comes to making sure no one is building affordable housing on the street from them.
These people want to turn the tech ecosystem into the wild west where anyone who has no privilege or power will simply be run over, and I firmly believe that their views will make them less desirable if on cap tables stand. We know the values that founders voted for in their twenties and thirties, and “everyone for himself” is not one of them.
Don’t be scared by someone who might give you a term sheet and think that de-platforming violence and hatred is censorship. Don’t be told that living wages have to come at the expense of “freedom of the workers”. Don’t buy the argument that anyone can grab their bootstraps unless you see them battling the SEC so that, as a non-accredited investor, you can put $ 100 in their fund – given how much he’s boasted about his top-quartile returns and unicorn investments. Don’t be told that anyone can learn to code and make a living unless they’re willing to set up a homeless shelter with internet access in their neighborhood.
The US has a long history of racism and class division, both of which have been rapidly accelerated by technology booms. As venture capitalists, our decisions about capital allocation and our presence (or absence) on the boards of these companies must be accompanied by a sense of responsibility related to how we got to events not just in the last week but in the last four years Plus.
Hopefully a new generation of VCs will help us look forward to a future of both healthy returns and technology – technology that improves access, creates a level playing field for people, and makes life easier for not just SF programmers but the rest of the country as well. This is where more and more founders come in – they solve big problems with just solutions, and this week’s Tweets will help them decide who to take for this ride and ask the questions we haven’t asked in the past two decades .