This is Part 3 in a series of responses to Marc Andreessen’s call to action, It’s Time to Build. My intention is to ask questions that will hopefully inspire the builders to avoid the mistakes of the past that led to our current political and economic dilemma.
Last week, I asked the question: Build for Who? to evaluate common issues with shareholder capitalism including the Tragedy of the Commons. I also introduced the stakeholder model of capitalism and asked if this might offer a way forward.
Aligning Private and Public Interest
We have understood the Tragedy of the Commons since 1833 when William Foster Lloyd published a pamphlet on cattle herders and grazing on a common parcel of land. Since then, countless academic papers have been published on the issue.
Yet the current frameworks that govern how we build have not found a way to meaningfully combat this problem. Instead, we continue build systems that privatize the profits and socialize the gains. To make matters worse, our checks & balances against such behavior have lagged the rapid technological evolution of the digital world in which many of us now spend 10+ hours per day.
As Klaus Schwab & Nicolas Davis wrote in their book Shaping the Fourth Industrial Revolution, “We face the task of understanding and governing 21st century technologies with a 20th century mindset and 19th century institutions.”
Now more than ever, we need to draw distinctions between what is best for private interests vs. what is best for the public interest.
COVID19 has only accelerated the trend of “software eating the world.” This is easy to see if you look at the asymmetric impact the crisis has had on the stock prices of technology companies like Microsoft, Facebook, Amazon, and Google (who continue to devour a larger share of the economic pie) versus industries like retail, restaurants, and hotels.
Unfortunately, many of the laws and regulations that we have in place to protect public interests in the physical world have not caught up to this digital acceleration, and it is unclear if they ever will.
So while I believe that Marc Andreessen’s call to build was important, I think it did not go far enough. When faced with the failure of our public institutions, we need private enterprises to step up and commit to building in a new way!
This is a subject that I think will require a tremendous coordinated effort across society. It will be exceptionally difficult to uproot vested interests in existing broken systems while we plant new ones beside them.
Of course, I don’t expect to solve this with one blog post written in a few hours on a Monday. In fact, as I’ve begun to research this subject, I’m feeling quite strapped for time, so going to make this post in list form with the hope to revisit later.
A Few Ideas How We Might Build Better
Involve All Stakeholders
In January 2020, just before COVID rocked its business model, AirBnB began pioneering work in governance for all stakeholders (not just investors) in the company. First, they identified their stakeholders; then they established principles and metrics for serving these stakeholders; next, they added a Stakeholder Committee to the company’s Board of Directors; and finally they made stakeholder-thinking enforceable by tying employee compensation and bonuses to new metrics around stakeholder value creation.
Value Employees (including “gig workers”)
Common stakeholders in all companies are their employees. Increasing income disparity over the last few decades between company CEOs and company employees has not been addressed.
Meanwhile, nearly 35% of the US workforce or 55 million Americans are now “gig workers.” I expect the future of work to look a lot more like one individual with many gigs than one individual working for one company. We need to treat gig-workers with respect and offer them the same types of protections and benefits offered to full-time employees.
Lower Time Preference — Focus on the long term
In my last post, I mentioned that identifying stakeholders includes differentiating between present and future stakeholders. This means re-evaluating the time horizons that we measure and deem to be important.
One of my favorite books on governance Battle for the Soul of Capitalism written by the founder and former CEO of Vanguard, John Bogle, does a great job addressing this issue. He believes that quarterly, and now monthly earnings reports have led to a short-term executive mindset which is damaging to the long-term viability of our economy.
Get Smart on Externalities
In a world of ubiquitous data why is it that we only measure key performance indicators like Daily Active Users, customer retention, and growth.
Can we apply this same rigor to measuring and minimizing externalities?
Build Regenerative Enterprises
“A system that is predicated on exponential growth, supported by the exponential increase in the use of materials, fundamentally doesn’t work on a planet that’s fixed in scale.” — John Fullerton
Our current linear supply chains that optimize for cost efficiency and growth have been exposed. For example, in the US we are simultaneously experiencing unprecedented food waste, while many of the 30M Americans who are now unemployed will struggle to feed their families.
How can we build systems that not only reduce waste, but also reallocate that waste as an input to another connected system?
Focus on Privacy and Self-Sovereignty
Finally, as more of our daily lives (like birthday and cocktail parties) move online, it is imperative that companies be responsible stewards of private user data.
The rise of Orwellian authoritarianism post-COVID is palpable. Government authorities, often in the name of our public wellbeing will now ask that we give up our freedoms.
For example, the Indian government recently made it mandatory for citizens who wish to travel to install the Aarogya Setu app on their phones. The intention is to restrict the spread of deadly pandemics like COVID, but it’s easy to see how this sort of “health scoring” could lead to a Black Mirror type outcome.
How can we build contact tracing and other technology that empowers individuals to maintain their privacy?
The Failure of Shareholder Capitalism in the Digital Age
As Tristan Harris identified in his recent talk at the Own Your Data Foundation’s Data Privacy in Times of Crisis event,
“Under our current economic paradigm, just as a whale is worth more slaughtered and gutted than alive and thriving. In attention & surveillance capitalism — a human being is worth more if he/she is a zombie that is distracted, addicted, polarized, disinformed, and narcissistic AND harvested for his/her data like meat, much more so than if he/she is a sovereign human being.”
This represents a fundamental failure of our economic model including the growth-at-all-costs mindset of Silicon Valley. We moved fast and broke things, but now we are realizing the extent of the damage.
I’ve mentioned this before, so I won’t bore you with the details, but in the west there is an acceleration in conspiracy theories, populism, anger, and an increasingly divided and violent society.
Mental health issues like anxiety, depression, and suicide are on the rise. There are now over 30 million newly unemployed people in the US, which will only worsen these trends.
COVID19 has brought us face-to-face with a much larger looming crisis — the crisis of shareholder capitalism. The stakes have never been higher and time is running out for us to find solution