Posts from policy

The Monthly Match

Last month, when the Gotham Gal and I and our friends Brad and Amy combined to match $20k of donations to the ACLU and ended up raising $120k on a weekend that saw the ACLU raise over $25mm, we committed to do a match every month for all of 2017. Part of me wants to keep doing this as long as we have an administration hostile to the rights of minorities in the White House but we will see about that. We are going to keep doing this monthly match for the rest of 2017 and then we will see how we feel about it.

So, today we are launching a second match offer. Brad, Amy, Joanne, and I will match the first $20k of donations to the National Immigration Law Center, which “engages in lawsuits that defend the fundamental and constitutional rights of all Americans, including low-income immigrants and their families, often in coordination with other local and national civil rights organizations.” You can read about their work and their mission here. The NILC has been around for almost 40 years and has done some amazing work over that time and we need them more than ever right now.

Why did we pick the NILC over many other groups that need our support right now? Well first of all, we plan to do this every month with a different organization that is supporting the rights of minorities that are at risk under this administration. So we have a long list and this is just the first of many we will support with our monthly match.

But more importantly, we remain upset and anxious about the efforts of this administration to throttle immigration and the rights of immigrants, both those in the US and those coming to the US. We have had some early victories in the courts but we need to keep up the fight for as long as the administration continues to pursue these efforts and along with the ACLU, the NILC is an important leader in this fight.

Here is how the monthly match works:

  1. Go to our monthly match page and hit the donate button and give whatever you feel like giving (min is $10).
  2. After you complete the donation, TWEET your donation out on the post donation page. That will register it for our match.
  3. If you don’t use Twitter, you can forward your email receipt. The instructions will be on the post donation page. We would vastly prefer you tweet it out if you can.

Last month, we used Twitter for this and had to manually record every tweet including a receipt. That was fun but a pain to administer. This time we are using Crowdrise for the donations and the accounting but keeping Twitter for the virality that was so awesome and brought in so much money. We have customized Crowdrise to make it feel as much like the Twitter campaign we ran as we could. We think this will work better and we will be optimizing this as we continue these monthly matches for the rest of the year.

I hope all of you who agree that we must fight the efforts of this administration to throttle the rights of minorities will join our monthly match campaign this month, and every month this year, and support the NILC. Go here to do that.

The Robot Tax And Basic Income

In my work to prepare for the Future of Labor conversation we had at NewCo Shift a few weeks ago, I talked to a number of experts who are studying job losses due to automation and thinking about what might be done about it. Two ideas that came up a number of times were the “robot tax” and the “basic income.”

The ideas are complementary and one might fund the other.

At its simplest, a “robot tax” is a tax on companies that choose to use automation to replace human jobs. There are obviously many variants of this idea and to my knowledge, no country or other taxing authority has implemented a robot tax yet.

A “basic income” is the idea that everyone receives enough money from the government to pay for their basic needs; housing, food, clothing so that as automation puts people out of work we don’t see millions of people being put out on the street.

What is interesting about these two ideas is that some of the biggest proponents of them are technology entrepreneurs and investors, the very people who are building and funding the automation technologies that have the potential to displace many jobs.

It is certainly true that we don’t know that automation will lead to a jobs crisis. Other technological revolutions like farming and factories produced as many new jobs as they wiped out and incomes increased from these changes. Automation could well do the same.

But smart people are wondering, both privately and publicly, if this time may be different. And so ideas like the robot tax and the basic income are getting traction and are being studied and promoted.

The latest proponent of a robot tax is Bill Gates who said this about it:

You ought to be willing to raise the tax level and even slow down the speed. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. You cross the threshold of job replacement of certain activities all sort of at once.

There is a lot of economic surplus that could come from automation. Let’s look at ride sharing. Today I pay something like $15 to go from my home to my office in the morning. Something like $10 of that ride is going to the driver. If the ride is automated, either the price goes to $5, saving me $10 a ride which then is surplus to me, or the profit that Uber is making goes up significantly, which is surplus to them. Some of both is likely to happen. This surplus could be taxed, either at the company level or the individual level, so that the cost of the ride doesn’t go down nearly as much and the driver can continue to compete with the robot or the driver can collect some basic income, funded by the robot tax, while they find a new line of work.

At least that is the idea.

I would not characterize myself as a proponent of a robot tax or a basic income. But I find these ideas interesting and worth studying, debating, discussing, and testing at a small scale to understand their impacts. We should absolutely be doing that.

The Future Of Labor

As I mentioned yesterday, I am moderating a panel this morning at NewCo Shift Forum on The Future Of Labor.

As I think about, there are three big megatrends impacting the future of labor/work.

The first has largely played itself out over the past thirty years and that is globalization and outsourcing. I believe we have seen most of the impact of that trend in the US as wages and the standard of living has risen dramatically around the world and has stagnated here in the US for the working class. We are not yet in balance with the rest of the developed/developing world, but we are getting close enough that it is a much harder decision now to move a job somewhere else.

The next two big megatrends are starting to happen and they will shape the next fifty years. They are the move to an on demand model for work and the automation of work.

And so, the two people that are joining me on stage this morning are people who can help us think about where all of this might be going.

Stephen DeWitt is the CEO of USV portfolio company Work Market. I wrote a bit about Work Market here a few months ago. Work Market’s software allows employers of all shapes and sizes to arrange the people they work with into labor clouds. These labor clouds include freelancers, contractors, and full time employees. When they need something done, they issue the work order to the labor cloud and someone picks up the work order and gets it done. If you think about many of the operational things companies do (provide customer service, install something, attend a marketing event, make a house call, etc), these labor clouds allow an employer to get the work done without thinking about the kind of relationship they have with the worker. This is the “on demand” model for work and I think we will see this model explode in the coming decades.

Maya Rockeymoore is the CEO of Global Policy Solutions, a think tank and advocacy organization that focuses on the needs of workers and their communities. She is an expert on the US Social Security System and has written extensively on it and other issues.

I talked to Maya last week in anticipation of this panel discussion and I wanted to get her take on what happens to all of the jobs we could lose to automation over the next few decades. She explained to that we may want to look at the safety net that we built with social security as a model. We will get into that in more detail this morning as that is an interesting idea to me.

I don’t think all the work opportunities will be gone in fifty years. But I do think the nature of work is changing quite dramatically in front of our very eyes. Some jobs will clearly be automated out of existence. We are already seeing that. And other jobs will go from being full time employment to on demand employment and that will require big adjustments from everyone, including policymakers.

I thought it was interesting in Henry Blodget’s talk at DLD, which I blogged this past weekend, that we have gained 30 hours a month in productivity over the past fifty years and that 28 hours of those gains have gone towards watching TV. We are going to gain even more hours in productivity over the next fifty years. And what we do with those hours will say a lot about who we are as people, what we value, and where we are headed as a society. It is very possible that jobs and work will matter less and other things will matter more, a concept my partner Albert has been considering in his book World After Capital.

We should be talking about these issues as a society instead of pretending that we are going to bring back all of the jobs lost to globalization and outsourcing over the past fifty years. Those jobs are more likely to be gone completely via automation than coming back to the US. So that’s what I plan to do with this panel today. It should be interesting.

Capitalism At A Crossroads

I am on a plane flying up to SF to attend a two day conference called NewCo Shift Forum.

The premise behind this conference, put together by my friend and tech conference impresario supreme John Battelle, is that capitalism is at a crossroads brought on by changing political winds across the globe, technological advancements, and a growing consolidation of power and wealth at the very top. The longer treatise on why this conversation needs to happen is here.

This is not your ordinary tech conference where we are all promoting how great tech is and how successful our companies are. I don’t know about you, but I am tired of those kinds of events. This is a conference that features more academics, policy people, authors, and analysts than founders and CEOs. There will be some of that too, but it’s a balanced discussion covering all sorts of important questions that will need to be answered as we move things forward.

I am participating in one panel (Tech Under Trump) and moderating another (The Future Of Labor). I am looking forward to both conversations.

I don’t know about the plans to record and/or stream the conference. I suspect it won’t be streamed but will be recorded. But I will find out and update this post or post a comment with that information.

The End Of The Level Playing Field

I am old enough to remember the gogo days of cable TV when entrepreneurs who wanted to launch a new cable channel would go, hat in hand and cap table in tow, to the big cable companies and beg to get distribution on their networks. 

When the Internet came along in the early 90s, we saw something completely different. Here was a level playing field where anyone could launch a business without permission from anyone. 

We had a great run over the last 25 years but I fear it’s coming to an end, brought on by the growing consolidation of market power in the big consumer facing tech companies like Google, Apple, Facebook, Amazon, etc, by the constricted distribution mechanisms on mobile devices, and by new leadership at the FCC that is going to tear down the notion that mobile carriers can’t play the same game cable companies played.

Here is a quote from the incoming FCC Chair:

“Today, the Wireless Telecommunications Bureau is closing its investigation into wireless carriers’ free-data offerings,” FCC Chairman Ajit Pai said in a statement. “These free-data plans have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace. Going forward, the Federal Communications Commission will not focus on denying Americans free data. Instead, we will concentrate on expanding broadband deployment and encouraging innovative service offerings.”

It is certainly true that consumers, particularly low-income consumers, like getting free or subsidized data plans. There is no doubt about that. But when the subsidies are coming from the big tech companies, who can easily pay them, to buy competitive advantage over that nimble startup that is scaring them, well we know how that movie ends.

It is sad to see this era ending. It was a lot of fun and quite profitable too. I am hopeful that some new competitive vector, like the Internet, will come along and make all of this moot and we are spending a lot of our time looking for it. Because backing startups on a field tilted in the favor of the incumbents is not fun and not particularly profitable either.

Protecting The Right To Speak And Write And Blog

I stayed out of the public debate and discussion of the Gawker lawsuit because while I privately came down on the side of Gawker, the specifics of the case made me uncomfortable and I don’t think it was an ideal case to determine what is free speech and what is not.

However, the same lawyer, Charles Harder, who argued the case against Gawker, is back with another libel suit, this time against Techdirt and its founder and lead writer Mike Masnick. Regular and longtime readers of this blog will know that I am friends with Mike and have supported his efforts to speak out on Techdirt about all sorts of tech policy issues over the years.

The specifics of the Techdirt case are easier for me to get excited about. Mike has consistently and rigorously debunked the claims of Dr. Shiva Ayyadurai that he (Dr Ayyadurai) “invented” e-mail. Dr. Ayyadurai is upset with Mike about this and so he hired Charles Harder to file a $15mm libel suit against Techdirt and Mike.

Regardless of whether Dr. Ayyadurai invented email or not (I highly doubt it), we have a long standing history in scientific and technical circles and in the United States of freely, openly, and publicly debating and discussing technical issues like this. Through that sort of public debate and discussion we determine what is real and what is not and we also move the understanding of science and technology forward. These public debates can get nasty and personal, and that is unfortunate, but I believe it is better that we allow for this debate than set legal precedent that wealthy people can stifle debate by suing publications out of business.

So, I am urging everyone who cares about the legacy of free, open, and public speech and debate about technical issues to support Mike and Techdirt’s efforts to defend themselves. Mike wrote a blog post about this issue last week and this is taken from that post:

I am beyond thankful to the many of you who have reached out and offered to help in all sorts of ways. It is heartening to know so many people care about Techdirt. At some point soon, we may set up a dedicated legal defense fund. But, in the meantime, any support you can provide us will help — whether it’s just alerting people to this situation and the danger of trying to stifle a free press through meritless lawsuits, or it’s supporting Techdirt directly (or, if you have a company, advertising with us). As always, you can support us directly as a Friend of Techdirt, or check out some of the other perks you can get in our Insider program. You can also support us via Patreon.

I am hoping that Mike sets up a dedicated legal defense fund and plan to contribute to it if he does. I will let AVC readers know if that happens. Until then, let’s all get behind Mike and put a stop to this nonsense.

The Department of Homeland Security International Entrepreneur Rule

From GeekWire:

The Department of Homeland Security has officially enacted a provision to make it easier for immigrant entrepreneurs to build startups in the U.S. The rule, proposed by President Barack Obama last summer, takes effect exactly one week before he leaves the Oval Office.

The initial rule outlined a “parole” period that foreign entrepreneurs could apply for, granting two years in the U.S. to grow a startup. To qualify, the founder had to prove that the startup met certain requirements and demonstrated the potential for “significant public benefit.” After the initial parole period, the founder could apply to extend his or her stay in the U.S. for an additional three years, if the startup met additional benchmarks.

Over the past five months, DHS has been collecting public feedback on the proposal to inform the final rule. That comment period led to a few key changes to the final rule, enacted today.

Instead of a two-year period followed by a three-year period, the rule now says entrepreneurs can apply for an initial parole of 2.5 years, followed by an extended period of 2.5 additional years.

The proposed rule said startups needed to have investments of at least $345,000 from qualified U.S. investors to apply for parole. DHS has reduced that minimum required investment to $250,000. The official rule also gives entrepreneurs more time to land funding — 18 months instead of one year.

The final rule also reduces the ownership stake the founder needs to have to qualify. Instead of 15 percent, entrepreneurs need to own only 10 percent of the startup to qualify for the initial parole period. To re-apply for an additional 2.5 years, founders just need 5 percent ownership.

In the proposed rule, a startup had to generate at least 10 jobs during the initial 2.5-year parole period to qualify for an extension. That number has been reduced to five jobs in the final rule.

This is really good thing. I know of a number of founders who have been unable to stay in the US even though they started a company here that is growing and hiring people in the US. Tossing people out who are starting companies that are creating new jobs in the US is nuts but that’s what we have been doing. This rule changes that, at least temporarily, and that’s a good thing.

Here’s the rule in its entirety:

International Entrepreneur Parole by GeekWire on Scribd

What Is Going To Happen In 2017

Happy New Year Everyone. Yesterday we focused on the past, today we are going to focus on the future, specifically this year we are now in. Here’s what I expect to happen this year:

  • Trump will hit the ground running, cutting corporate and personal taxes, and eliminating the preferential treatment of carried interest capital gains. The stock market has already factored in these tax cuts so it won’t be as big of a boon for investors as might be expected, but the seven and half year bull market run will be extended as a result of this tax cut stimulus before being halted by rising rates and/or some boneheaded move by President Trump which seems inevitable. We just don’t know the timing of it. The loss of capital gains treatment on carried interest won’t hurt professional investors too much because the lower personal tax rates will take the sting out of it. In addition, corporations will use the lower tax rates as an excuse to bring back massive amounts of capital that have been locked up overseas, producing a cash surplus that will result in an M&A boom. This will lead to an even more fuel to the fire that is causing “old line” corporations to acquire startups.
  • The IPO market, led by Snapchat, will be white hot. Look for entrepreneurs and the VCs that back them to have IPO fever in 2017. I expect we will see more tech IPOs in 2017 than we have since 2000.
  • The ad:tech market will go the way of search, social, and mobile as investors and entrepreneurs concede that Google and Facebook have won and everyone else has lost. It will be nearly impossible to raise money for an online advertising business in 2017. However, there will be new players, like Snapchat, and existing ones, like Twitter, that succeed by offering advertisers a fundamentally different offering than Facebook and Google do.
  • The SAAS sector will continue to consolidate, driven by a trifecta of legacy enterprise software companies (like Oracle), successful SAAS companies (like Workday), and private equity firms all going in search of additional lines of business and recurring subscription revenue streams.
  • AI will be the new mobile. Investors will ask management what their “AI strategy” is before investing and will be wary of companies that don’t have one.
  • Tech investors will start to adopt genomics as an additional “information technology” investment category, blurring the distinction between life science and tech investors that has existed in the VC sector for the past thirty years. This will lead to a funding frenzy and many investments will go badly. But there will be big winners to be had in this sector and it will be an important category for VCs for the foreseeable future.
  • Google, Facebook, and to a lesser extent Apple and Amazon will be seen as monopolists by government and individuals in the US (as they have been for years outside the US). Things like the fake news crisis will make clear to everyone how reliant we have become on these tech powerhouses and there will be a backlash. It will be Microsoft redux and the government will seek remedies which will be futile. But as in the Microsoft situation, technology, particularly decentralized applications built on open data platforms (ie blockchain technology), will come to the rescue and reduce our reliance on these monopolies. This scenario will take years to play out, but the seeds have been sown and we will start to see this scenario play out in 2017.
  • Cyberwarfare will be front and center in our lives in the same way that nuclear warfare was during the cold war. Crypto will be the equivalent of bomb shelters and we will all be learning about private keys, how to use them, and how to manage them. A company will make crypto mainstream via an easy to use interface and it will become the next big thing.

These are my big predictions for 2017. If my prior track record is any indication, I will be wrong about more of this than I am right. The beauty of the VC business is you don’t have to be right that often, as long as you are right about something big. Which leads to going out on a limb and taking risks. And I think that strategy will pay dividends in 2017. Here’s to a new year and new challenges to overcome.

New Economics

I am tired of the classic left/right perspective on society, policy, and politics. I realize that markets are an incredible tool to allocate resources efficiently. And I also realize that markets are subject to failure and we need to protect our society from these market failures. I am not a purist on either side of this debate and I find the hard core advocates on the far left and the far right impossible to take. I believe orthodoxy is one of the worst human traits.

So I enjoyed reading this post on “new economics” and I particularly like this table that shows the difference between traditional economic thinking and new economic thinking:

The post goes on to explore how these new economics thinking will eventually impact politics, policy, and society at large.

One particular example reminds me of our work at USV on “Regulation 2.0”:

First, rather than predict we should experiment. Policymaking often starts with an engineering perspective – there is a problem and government should fix it. For example, we need to get student mathematics test scores up, we need to reduce traffic congestion, or we need to prevent financial fraud. Policy wonks design some rational solution, it goes through the political meat grinder, whatever emerges is implemented (often poorly), unintended consequences occur, and then – whether it works or not – it gets locked in for a long time. An alternative approach is to create a portfolio of small-scale experiments trying a variety of solutions, see which ones work, scale-up the ones that are working, and eliminate the ones that are not. Such an evolutionary approach recognises the complexity of social-economic systems, the difficulty of predicting what solutions will work in advance and difficulties in real-world implementation. Failures then happen on a small scale and become opportunities to learn rather than hard to reverse policy disasters. It won’t eliminate the distortions of politics. But the current process forces politicians to choose from competing forecasts about what will and won’t work put forward by competing interest groups – since it is hard to judge which forecast is right it is not surprising they simply choose the more powerful interest group. An evolutionary approach at least gives them an option of choosing what has been shown to actually work.

I also like this bit about the tolerance for failure:

A major challenge for these more adaptive approaches to policy is the political difficulty of failure. Learning from a portfolio of experiments necessitates that some experiments will fail. Evolution is a highly innovative, but inherently wasteful process – many options are often tried before the right one is discovered. Yet politicians are held to an impossibly high standard, where any failure, large or small, can be used to call into question their entire record.

I don’t think the way we do things in startup land should be a model for how everything should work, but there is a lot to be learned from the way the tech sector works. Innovating, trying new things, measuring the impacts of these new things, and evolving leads to forward progress. And when something fails, we accept is as a lesson learned, not something to be embarrassed about (or fired for).

If the worlds of economics and politics are moving in our direction, I am very pleased and optimistic about that.