Posts from hacking government

Some Thoughts On Labor On Labor Day

When one looks back over the history of the development of the modern economy from the agricultural age, to the industrial age, to the information age, the development of a strong labor movement has to be one of the signature events. Capitalism, taken to its excesses, does not allocate economic value fairly to all participants in the economic system. The workers, slaving away to build the railroad, the skyscraper, etc, provide real and substantial value to the overall system and yet, because they are commodified and interchangeable parts, they don’t always get their fair share of the economic value they help to create. So the labor movement provides the market power that each worker individually cannot provide.

The emergence of the middle class in the developed world in the 19th and 20th centuries has as much to do with the emergence of a labor movement as it has to do with anything. And a growing middle class in turn drove economic development as the obtained earning power was spent on needs like homes, cars, education, etc.

I am a fan of the idea that labor needs a mechanism to obtain market power as a counterbalance to the excesses of markets and capitalism. I think we can look back and see all the good that has come from a strong labor movement in the US over the past 150 years.

However, like all bureaucratic institutions, the “Union” mechanism appears anachronistic sitting here in the second decade of the 21st century. We are witnessing the sustained unwinding of 19th and 20th century institutions that were built at a time when transaction and communications costs were high and the overhead of bureaucracy and institutional inertia were costs that were unavoidable.

One has to think “if I were constructing a labor movement from scratch in 2015, how would I do it?”  My colleague Nick Grossman coined the term “Union 2.0” inside our firm to talk about all the organizing tools coming to market to assist workers in the “gig economy.” But I think Union 2.0 is way bigger than the gig economy. The NY Times has a piece today on workers in a carwash in Santa Fe organizing outside of the traditional union system. One can imagine leveraging technology, communications, and marketplaces to allow such a thing on a much larger scale.

I don’t know how much the traditional union system taxes workers to provide the market power they need. But if its like any other hierarchical system that we are seeing replaced by networks and markets, the take rates are in the 20-40% range and could be lowered to sub 5% with technology.

That’s a big deal. And I suspect we will see just that happen in my lifetime. I sure hope so.

Getting To Broadband For All

Ryan asked me what I thought about the news that the FCC is going to expand the Lifeline program, which provides a $9.25/month subsidy for phone (wired and wireless) to the poor, to include broadband.

In the short term it makes a ton of sense to me to say “you can use your $9.25/month subsidy to get broadband in addition to cell service” but I’m wondering if there isn’t more systemic and sustainable way to deal with the fact that 30% of US citizens still don’t have broadband at home.

The Lifeline program costs $1.7bn and is paid for by telecom service providers. It currently services 12mm households in the US.

There are roughly 330mm residents of the US, so approximately 100mm of them do not have broadband at home.

The Lifeline program alone is not going to solve this problem.

Part of the problem is that broadband is not available in certain rural locations. We have a home in Utah where there is no cable service and the best Internet we can get is 1.5 megabit DSL. And that connection is flaky at best. The minimum speed to qualify for “broadband” designation is currently 25 megabit and it is super hard to get that out of copper. This is not a new problem. There was a similar problem getting phone service out to rural locations in the last century.

Part of the problem is that broadband is too expensive for people living off very low incomes or no income. Time Warner Cable provides 15down/1up for $35/month. And that isn’t even technically “broadband”.

And some of those 100mm that don’t have broadband at home don’t want it. They either don’t have Internet, they have dial-up, or they use their phones when they want the Internet.

But if we look forward twenty or thirty years, the percentage of people who are going to want to live without broadband at home will likely decline to near zero. So coming up with some way to address this issue is an important policy issue and one that I’ve thought a lot about.

It seems to me that wireless is the way forward. It avoids the cost of running cable to every home and it also recognizes that people need broadband wherever they are.

I believe it is time for the US to rethink our wireless strategy. Currently we auction off spectrum to the highest bidder, raising tens of billions for the US Treasury, and then tax the winners a small portion of their revenue to provide a small benefit ($9.25/month) that doesn’t even come close to getting us to universal access. If you think of the annual cost of Lifeline ($1.7bn per year) over a decade, that is in the ballpark of what a wireless carrier will pay for a big band of licensed spectrum.

What if, instead of auctioning off spectrum to the highest bidder, we took some of our best spectrum and made it available to everyone to innovate on, like the Wifi spectrum is? And what if we provided tax subsidies to entrepreneurs who want to build out rural broadband companies using that unlicensed spectrum? And what if we provided free real estate for cell towers on our public housing projects, our school buildings, and our libraries in return for providing open and public networks in and around those tower locations?

We need to change the basis of competition in the wireless broadband industry if we want to get to universal access. We can’t keep maintaining a small oligopoly in wireless in this country and think that somehow we are magically going to get to universal access. We must create policy frameworks that allow thousands of new wireless telecommunications companies to get started in the coming years and we need to create economic incentives for these new entrants to build out networks where it is less attractive to do so. That will have the additional result of causing the incumbents to decide to compete in these less attractive areas as well. We’ve seen that with Google Fiber and some muni fibers efforts already.

I don’t buy into the conservative argument that we cannot afford to provide benefits to those who can’t afford them. I don’t buy into the liberal argument that we must tax and spend our way into solving these problems. I buy into the capitalist argument that if we create the right economic structures and incentives, entrepreneurs can and will solve these problems in a sustainable way. And I think that is the answer with universal broadband.

Why be civically engaged if you’re in tech?

Tomorrow, Ron Conway and I are going to kick off Disrupt NY 2015, with a fireside chat with Kim-Mai Cutler. We plan to discuss philanthropy and civic involvement. I’m looking forward to this talk. I think folks in the tech sector need to embrace philanthropy and civic involvement and I look forward to making the case for that.

I’ve been working in the VC business since the mid 80s. And for most of that time, I’ve felt that the tech sector was surprisingly uninterested and uninvolved in things outside of the tech sector. That’s a great strength of the tech sector, it’s is focused on innovation, making things, and building companies. And it does not get distracted by things outside of that realm.

But we know that the things we make and the companies we build have great impact on those outside of the tech sector. It can be for the good, like building cars that don’t use carbon fuels and showing the auto industry that it can be a good business to do that. It can be for the bad, like automating away jobs that once paid the way for a middle class lifestyle.

It feels to me that our economy and our society is now deeply entwined with technology and being significantly impacted by it. If that is true, I believe it is shortsighted to avoid getting engaged in the discussions and debates about what kind of world we need to work toward. I think one way or another the tech sector is going to get pulled into these debates. It will be one thing if that happens thoughtfully and positively and another if the tech sector is pulled into them kicking and screaming.

Regular readers of this blog know that my partners and I have been involved in these discussions since we started USV over a decade ago. We spend our time, energy, and capital in areas like policy debates, philanthropy, and civic engagement. There are others in the tech sector who do the same. Ron Conway comes to mind as someone who has spent a similar amount of time, energy, and capital on this stuff. And I am thrilled to share the stage with him tomorrow as we discuss these issues.

We go on stage at 9:05am eastern tomorrow. I’m hoping the talk will be livestreamed and you can watch it live. If it is, it will be somewhere like here.

Startups Matter In DC

In the WSJ post about the FCC’s decision (announced yesterday) to adopt Title II as the mechanism to insure that last mile access providers don’t mess with the open Internet, they explain how the White House came around on this issue:

The prod from Mr. Obama came after an unusual, secretive effort inside the White House, led by two aides who built a case for the principle known as “net neutrality” through dozens of meetings with online activists, Web startups and traditional telecommunications companies.

Acting like a parallel version of the FCC itself, R. David Edelman and Tom Power listened as Etsy Inc., Kickstarter Inc., Yahoo Inc. ’s Tumblr and other companies insisted that utility-like rules were needed to help small companies and entrepreneurs compete online, people involved in the process say.

In an office on the fourth floor of the Old Executive Office Building, some companies claimed they would have never gotten off the ground if they had been forced to pay broadband providers. “We want to compete on product and service, not on our ability to negotiate preferable treatment with an Internet service provider,” said David Pashman, general counsel for Meetup Inc.

Note that startups like Meetup, Etsy, Kickstarter, and Tumblr are mentioned. These companies took the time to go to DC and explain how an open Internet allowed them to get into business and stay in business. And DC listened.

That’s hopeful and important in a world where it seems the big guys have all the weapons. David can beat Goliath. It is not just a fable.

Next Wednesday Is The Internet Slowdown

We’ve talked a lot here at AVC about Net Neutrality. I hate that term because it’s got so much baggage now that it is essentially meaningless to me. What I want to see is a framework that everyone agrees to (application developers, bandwidth providers, last mile access providers, and the regulators) that says you can’t prioritize one bit over another in the last mile access network and you can’t charge application developers to deliver their bits to the end user.

This issue is coming to a head at the FCC as the comment period is ending and some sort of decision will be made this fall. So next Wednesday, September 10th, is the Internet’s opportunity to stand up and be heard.

If you are with me on this issue, please consider joining the Internet Slowdown campaign next Wednesday. There are all sorts of ways you can do this. You can change your avatars on your social media profiles, you can send push notifications if you operate a mobile app, you can put a slow loading graphic on your blog or website (there are WordPress widgets if you are on WordPress like I am).

And if you still aren’t convinced, please read Chad Dickerson’s piece in Wired this week on why this issue is important to businesses and everyone who uses the Internet to reach their customers and/or audience.

Algorithmic Organizing

My partner Albert penned a post yesterday (on and because of labor day) talking about the changing nature of work (more freelancers working on marketplace platforms) and suggested some interesting ideas. You can read his post here.

The two really interesting and related ideas are:

– A legal right for workers on these platforms to have real time (API based) access to the information about their work, pricing, supply and demand in the marketplace, etc, etc

– The development of algorithms (and coops and communities using these algorithms) that will allow these freelance workers to extract the best rates for their work

I believe that in the long run these platforms may/will be replaced by blockchain based networks of labor where there is no platform middleman and there would be no need for a legal right to an API because all the data would be public by default.

But who knows how long it will take for that transformation to happen? In the meantime, Albert’s ideas are really good and I would encourage people who are thinking about old school based regulation of these platforms to think instead of a new school regulatory approach along the lines of what Albert has suggested.

Video Of The Week: Etsy and Rockford

Our portfolio company Etsy is helping Rockford Illinois build an entrepreneurial economy in their city. Here’s a short (3 min) video that talks a bit about what they are doing and how it got started.

MayDay PAC

Today, July 4th, the anniversary of the day in which our founding fathers signed the Declaration of Independence, is also the final day of a crowdfunding campaign to raise $12mm for a Super PAC to fund campaign finance reform.

This campaign is called MayDay and the person behind it is Larry Lessig.

The idea is to use the $12mm to make campaign finance reform the fundamental issue in five high profile congressional races and win them.

If that works, then May Day PAC will crowdfund a much larger amount in 2016 and do this again in a lot more races.

Larry’s assertion is that the vast majority of americans want big money out of government, but the small number of people with the big money don’t want that to happen and they are calling the shots now.

He believes that the best way to fix that is for everyone with small amounts of money to come together and put together some big money and go toe to toe with them.

I think it is an interesting idea and when Larry raised the first $1mm from the crowd, the Gotham Gal and I participated in the small group that matched the first $1mm. We can and do write big checks to politicians because that’s the way our corrupt system of government works right now. We are happy to write big checks to change that system and make it right.

The second part of the crowdfunding campaign is seeking to raise $5mm and then get that matched in the same way the first $1mm was matched.

With one day to go, the campaign is short by about $1.5mm. It would be amazing if the american public celebrated July 4th by coming up with the final $1.5mm.

If you are so inclined, you can help do that here.