Volcanoes are erupting in The Philippines, but on-fire Australia received some welcome rain. The Iran war cries have been called off and The Donald’s military powers are about to be hamstrung by the Senate. Meanwhile, his impeachment trial is starting, and we’re all on Twitter for a front-row seat.
S2. EPISODE 2
Does Work Work Anymore?
Featuring Roy Bahat
Work ain’t what it used to be—just ask the millions of Americans who are part of the “Great Resignation.” Venture capitalist and head of Bloomberg Beta, Roy Bahat, is looking to shape work for the better, from new forms of labor organizing to remote-friendly tech.
Prefer to read? Check out the Audio Transcript
Look, I’m a capitalist, but capitalism without competition is not capitalism. It’s exploitation.
The vote count is in and Amazon has won enough votes to beat the union effort in Alabama.
So the vote is over and it was fairly one sided. I’ll give you the final numbers. 1,798 votes against the union, 738 votes for the union.
It is founded on the conception that only through ordered liberty, freedom, and equal opportunity to the individual, will his initiative and enterprise spur on the march of progress.
There is a question then of are you profiting from some of the things that that company is doing, that they make a profit on that you’re not proud of?
If you are watching us from the last home you’ll ever own tonight, consider yourself lucky. Same goes for anyone ready to buy a slice of the American dream. But if you’re among the millions trying to sell, this was a very bad day…
Zachary Karabell (ZK): What could go right? I’m Zachary Karabell the founder of The Progress Network. And I’m here as always with Emma Varvaloucas, the executive director of The Progress Network. And we are having a series of stimulating conversations with stimulating people about vital issues, trying to navigate our way through a public discussion that tends to be mired in dystopian despair, that we are trying to focus a little bit more on what could go right? What can we all do to change the world that we’re in to the better, and to make the present into the future that we hope and not the one that we fear. And we are talking to today with someone who is at a potent intersection of allocating capital as a venture capitalist to startups, but also in his own way, somewhat mission driven. Although that’s a whole term of art for a certain type of investor that is actually mission driven.
Roy Bahat is a little bit more mission driven in sentiment more than he is in the specific way he invests, but he has thought a lot about both in his roles in government and now, at his roles at Bloomberg Beta about how to allocate capital to entrepreneurs who are solving the crucial problems of our moment. So we’re gonna have a, I hope a wide ranging conversation that covers both the macro political, the macroeconomic, but also the very specific about what are people doing with their money and what are interesting and creative areas that are also problem solving and how that money is used and by whom and for what. So Emma, tell us a little bit more about Roy.
Emma Varvaloucas (EV): Roy Bahat, as you said, is a venture capitalist, and he focuses particularly on the future of work, which we’re gonna talk to him today about especially labor organizing, little spoiler there. Prior to his life as a VC, he was at startups, he served as a corporate executive at NewsCorp. He also worked in the government, in the office of New York City mayor Michael Bloomberg. Now he’s the head of Bloomberg Beta, which is an investment firm with 150 million under management. And he and his team invest in areas like automation, data, robotics, media, productivity tools, lots of other things, and little plug for Roy. He has a great series online on Twitter and elsewhere called “this is not advice which is advice for the modern workplace. And there’s also a manual as well. So if you find yourself in need of advice, definitely go there.
ZK: So let’s have our conversation with Roy.
EV: Let’s do it.
ZK: So, Roy, thank you so much for joining us for this conversation. I wanna start with something you, I think you wrote an article and, or tweeted or both. I think for many people these days…
Roy Bahat (RB): My hack on that, by the way, with books is watch the author’s YouTube video of them talking about the book. If at the end of that, you wanna read the book, read the book, but if at the end of that, you don’t, you save yourself nine or 10 hours.
EV: Wow. Can you pretend you read the book if you watched the YouTube video? Is that kosher?
RB: Sure. I mean, I guess you can just talk about the ideas in it, but then all the book people get very mad at me when I say that, because not realizing that they’ve just bundled a blog post into a book 90% of the time, but whatever.
ZK: That depresses me about half of my life work, it’s like go on in a, in a quick 20 minute video, but I suppose I was fated to that anyway. So you, you said something early in the pandemic that really stayed with me and I, and you, maybe you could fill us in about the context, but you said it’s okay to profit during a pandemic, but it’s not okay to profit from a pandemic. And given that we are, I guess, about two years from, from the beginning of all this, or more than two years from the beginning of all this, when it comes to China…
Today also marks six months since the World Health Organization declared the coronavirus outbreak a global pandemic.
It was exactly one year ago today, March 11th, 2020, that the World Health Organization officially declared COVID-19 a global pandemic.
The World Health Organization is marking two years since the start of the COVID-19 pandemic.
ZK: So what do you feel when you look at business writ large? This is a very open ended question—business writ large over the past few years, have there been in your mind, egregious examples, people profiting from the pandemic, you know, for instance, did Peloton profit from it or during it.
RB: Good question. So it was a timing and dosage answer, and I was thinking at that time, and I haven’t thought about it in a while. So thank you for reminding me. I was thinking at that time about an individual company of sort of how far was it okay to push it? And what I was trying to suggest is not that there’s some obvious distinction between what’s too far, but that there is a line. And of course, if you’re a mask manufacturer and you made money selling masks, good, if you gouged people on prices, bad. And where’s the line between that I think is a matter of examining instances. I don’t think I’m aware of many individual companies that I think at least that I know of, and this may be a failure of my own reading, that were obvious and egregious examples of profiteering. Let’s call it that.
And I’d be curious if you can think of any. What I do think has happened that is a more pernicious issue, and we can talk about it or not, is that the business world as a whole has benefited dramatically from the macro economic policies and environment around the pandemic. I mean, if you ran a company, chances are you got a lot wealthier during this pandemic while lots of people died and lots of people suffered. And while I have no problem with people getting wealthier, I definitely have a problem with people suffering. And so it seems pretty clear to me that inflation of asset prices and inflation of—I’m not a macro economist—but inflation of household good prices and housing prices being related as they are, that there are ways in which the pandemic has made the best off better off and harmed lots and lots of people. So I think that’s a concern societally, but I don’t know that of individual business examples that I can think of.
ZK: I said for years both jokingly and truthfully that I’m not a macro economist, but I play one on TV cuz I was introduced so many times as that. I think there are many people who claim the mantle of macro economics who have no better or no worse insights than those who do not. What do you think, Emma, did people profit from this in your view in a way that they shouldn’t have?
EV: So what came to mind was… An “entrepreneurial individual” would be a generous term. Not a business, although maybe you can make a case for some of the pharmaceutical companies in a way, but the individual that was hoarding hand sanitizer, he was like buying up all the hand sanitizer.
RB: That is a good example. And anybody who made fraudulent goods, right? Anybody who printed N95 or KN95 on something that wasn’t is both perpetuating a business fraud and a moral fraud in the sense that people believe they’re doing something to protect their lives and are not. But yeah, that hand sanitizer guy, you know, seemed like the easy example to point to.
EV: Would either of you guys pick up on the argument as a fair argument, that the pharmaceutical companies, in some ways profiteered, because obviously…no one’s expecting the pharmaceutical companies to make vaccines for no money. Although AstraZeneca, I think went with a nonprofit model, but they were price gouging lower income countries for doses, which seems to me to be a form of profiteering.
ZK: Although, kind of back on this point of what’s the pro or con of the market in this particular situation, the vaccines that came out of years of quiet, often frustrating, sometimes unclear investment, which were entirely based on the belief that there would be profit on the other side of that, you invest a lot now for a product that has a market. And did that give you some hope in spite of all these other issues about where the profit is going?
RB: Oh yeah. Look, if you read the—I forget what they call their document, I don’t think they call it a manifesto—of the DSA. It talks about the need for market based economy. So I think it’s really hard to find somebody who says that markets aren’t powerful, somebody reasonable. They can say they have lots of deleterious effects if you know, gone too far. And it’s funny as you were, I, I’m not an expert in how the vaccine was priced. I don’t feel like know enough about it. But when you said pharmaceutical companies where my head went was all the people who had massive mental health issues during the pandemic and you know, up their, pick your thing, their Zoloft, their Prozac, I don’t know how many of these are still generating profits. Cause I know they, many of them have generics and all that kind of thing.
And I guess what I think about it, these are my general philosophies on market economies, is we have been suckered, in the West, by the message that there is some inherent moral superiority to an unfettered market economy while every market economy is like… I used to be in the video game business. It’s a board game with rules. The rules constantly get tinkered with by governments who are sort of semi, you know, if I go to Dungeons and Dragons, say they’re semi dungeon masters for how their things you know, the rules work. And we want the rules to exist in balance. We want profit, but we don’t want too much profit. We want, you know, people to be able to keep their spoils, but no, not all their spoils. And so to me there isn’t some inherent moral good or bad to it other than the fact that it works and is effective when the rules are well balanced. And my issue is that in our current society, it seems like the rules are out of balance.
EV: Which rules are the problem?
RB: Well, I mean, I’ll just define first the outcome, which is, you know, we… So, you know, I run this venture capital fund. We’ve been exclusively focused on the future of work from the day we got going. And it didn’t take a great genius to realize that something about work in America was not functioning. And my, what took me a long time and work was landing at my succinct explanation of what is broken. So the rules question is, why is it broken? And we can get to that. But the, I start with what’s broken. And to me what’s broken is a typical American, however, defined, cannot follow society’s game by the rules, get an education, work hard and have a reasonable shot at a good life as defined by a stable income for themselves, their family, whoever they wanna provide for, and a sense of dignity.
And if the society fails to serve the typical person, let alone society should serve everybody. You know, that’s, to me the definition of a society in crisis. So we have therefore to me, an economy in crisis because, you know, but by definition, if it doesn’t serve the typical person, it doesn’t serve the majority of people. And that, I mean, how could you possibly get any worse than that? And what I’d say about which rules are broken is I think that’s where the diagnosis gets to things like how high should the floor be for people in terms of what is provided by the government. And the rule, I think the historical rule there is that the perceived… The right floor just seems to grow with time. And I think that’s a good thing. You know, it’s a good thing that we have social security. And if you didn’t have social security and you thought about adding it, I could see lots of free market zealots saying, what are you doing?
So that kind of is one thing that I think about, but I also think we need a different balance of power between working people and, you know, and companies in order to have a healthy game that we are playing. And game also makes it sound, I don’t mean to trivialize it, cuz of course this is a game with life or death consequences. So it’s more like squid game than it is like monopoly. Anyway, I could go on forever, but that’s some of how I think about what’s not working.
ZK: Although it’s interesting in the past year for the first time, really in at least a generation, probably more than a generation—30 years plus—it’s really the first time that wages have begun to rise in any appreciable way for the lower two quintiles of the income level in ways that were not a product of government action. I mean, yes, there was definitely some government action in municipalities like Seattle and elsewhere raising the minimum wage to $15.
RB: Distributing cash raises wages.
ZK: Right. But it’s, but that has in fact for the first time… There’s been a lot of cash flowing around for a lot of years.
ZK: Without that flowing down in any way, there’s been no trickle down basically. And that has not worked as an economic theory.
ZK: But in the past year, year and a half, you have started to see, and I know you’ve, you’ve both written and thought of a lot about this… Partly in conjunction with people opting out of the workforce or the virtualization for those who can, there’s a lot of people who never could do this, you know, you can’t virtualize being a cashier. You can’t virtualize being in a meat plant. You can’t virtualize being a teacher in school for very long—you obviously could, for a period of time.You’ve seen real wage growth in a way that I think is remarkable, right? I mean, it comes with some inflation, but it’s also, you know, the, those lower quintiles we’re talking 7, 8, 9, 10 plus percent. Is that a sign of a system functioning or is it an anomaly based on huge amounts of cash being injected in an emergency way by multiple governments, including the US federal government to address what we hope is a unique crisis?
RB: I do not think it is evidence that the system will self-correct on its own and be fine because too many people just don’t have enough leverage to get better wages. And one of the things that the cash distribution programs did and the Child Tax Credit did is give people more leverage to ask for more. So I think it is good that the market is responding, but the weird thing to me, and I see this at business conferences all the time, is, you sit there and business people sit and say things like, well, we have a labor shortage, and you know, one nonprofit leader who I know just said, no, we don’t. We have a wage shortage. And that’s Saru Jayaraman from One Fair Wage. And what’s a mystery to me is if we have a labor shortage, why wages haven’t crept up more to close the gap. And I really, I mean, I think there are a lot of smart economists who know and have figured structural reasons, but I think it’s obviously a good thing that wages have come up. And it seems to me a little bit like you’re at like in some sauna and the temperature is unbearably hot and it comes down a few degrees. It still might be unbearable, but it’s certainly better that the temperature came down a few degrees.
EV: Roy, what do you see as the path forward here? Because you, you framed like the economy and sort of this system of work has broken. And you know, you mentioned at least once on your Twitter recently, like, are we gonna be going towards a class war? So do you see a path forward and is that path forward a correction or a…
RB: Yeah, I mean, I’ll just say I hope not because yeah, by nature, I believe that, you know, the transitions all inevitably happen and the real question is can they happen with dignity or violence, or peace or violence? And I am really alarmed by this language that I see all over the place that is basically hate driven language. I mean, we can all sit there and say like, yeah, I’m against hate, and you know, Trump riled people up and that wasn’t good, but I see, you know, people who wanna protect their taxes from not coming up, being in that language. And I see working class people who engage in that language as well. And so as a matter of like just personal approach, I kind of think we’re all in it together. And we have to figure out a way forward, especially as the lines become blurrier between, you know… It’s like somebody who has a middle class job who may on the side buy a franchise for a fast food restaurant. Is that a working class person? Or is that a capitalist? Like I just don’t know. Is somebody who is a barista at Starbucks and has an Etsy store on the side, you know, is that a, like… I’m not trying to say an Etsy store is enough or anything like that, but I think we have all these blurry lines that make the old visions really hard for me to get my head around.
But to answer your question on what I think the answers are, I think that we’ve tried a bunch of answers that seem not to have worked. So let’s start with those. One is it’s reforming the education system. If only we can do that… Obviously we should reform the education system and make it better, but decades and decades of trying, it doesn’t seem like that’s worked. Another answer that people love is better training in job markets. If only you can teach the coal miners to code. And while I think all of that training is good and better job matching is good, it seems at best necessary, but insufficient. It seems to me like the kind of answers that we need are, and… I don’t know. I’m not here to show you my recipe for how to solve these problems. I think this is the reason for conversations like this one is we gotta figure it out together. I think it’s very clear we need a higher floor, healthcare being, you know, the, the single glaring example of that. It’s very clear we need a more engaged electorate, cause all these things go back to government and are people voting and you know, can they by law vote, but then do they choose to show up and turn up?
It’s very clear to me that the idea of full-time working poverty is something that should be impossible. And I don’t know if that requires a higher minimum wage. It probably does. I don’t know if it requires standards around good jobs that you know, the same way we outlawed child labor, maybe we should be outlawing certain things that the market allows, but that just shouldn’t be acceptable. And if folks have watched Made on Netflix, it’s like, you should sit there and think, geez, this person is genuinely working hard, full time or more, that you should not be able to do that and end up living in poverty in the United States. I mean, those seem like pretty obvious things to me. And I start with the obvious stuff, and then we can get into what’s the mechanism for getting there. And one of the reasons I’ve become obsessed with working people organizing is because A) obviously we’ve seen a lot more of it happening. And B) I can’t think of another path to get there other than different and more labor organizing.
I wish there was a way to know you’re in the good old days before you’ve actually left them.
Ronald Reagan for president. Let’s make America Great Again.
You hear people talk about the good old days all the time, right, lately. If we just go back to the good old days, the good old days, are you kidding me? These are the good old days, the good old days. We’re just figuring out how to do stuff now. And we don’t even have it figured out yet. You, you wanna go to the good old days. They didn’t know how to do anything back there, nothing.
But America’s not great right now. So we’re using the same slogan, Make America Great Again.
ZK: I think part of these discussions where I feel things get imbalanced, I’m gonna push back on you for a moment, which is the perception of what was versus the imperative to create what we think must be. And what I mean by that is it’s one thing to go, look at all the ways in which the promise of an affluent society remains a promise and not a reality, and that that’s not acceptable and we should do something to change it. We shouldn’t have people in working poverty. We shouldn’t have people losing their homes and having to declare bankruptcy for healthcare costs. A bunch of states are now finally addressing that as an issue. You know, all these things that we can go down the list for. It’s different, I think, and so much of our contemporary collective dialogue is framed by a belief that things were better and now they are worse.
RB: Yeah. I don’t think the past was all that great. I think the past is irrelevant. I think at best, the past was good for white men. And here we are, you know, three white people talking to each other about it. It’s pretty clear to me the past was not that good for anyone other than maybe white men.
ZK: Right. And I think that the, and this is a left and right thing, the past-looking nostalgia, crosses partisan grounds.
RB: One hundred percent agreed. Yeah. I don’t do nostalgia.
ZK: I think that’s more than semantic though. Cuz I think it frames your sense of what the issue is. Cause if, if you believe that things were better, you believe there’s something that got broken, that should be fixed. If you believe that things are incomplete, you can have a little more faith in several systems.
RB: I think that’s beautifully put. So I’m not trying to suggest that the past was better. And I think it is more than semantics. I do think things are broken and by broken, I just mean we can make them much better. And if you wanna call it incomplete, I think that, you know, to me, the only reason I try to focus on urgent language is there is genuine debate. Like when I go to business conferences, I meet people all the time who really don’t think the system is broken. They think the problem is either people didn’t work hard enough. They should all go learn to code and start their own business on whatever. Or that they think that if only other people could do what I did and I made it out of poverty and therefore blah, blah, blah. And so I believe in urgency, but I also share your view that it’s not like the arrow…
Look, we’re so wired as human beings to believe in stories. And one of the stories we love is the return of the king. And so elected leaders, others throughout history have used that nostalgia against us. And by the way, making America something again is another version of that, I think. And so I am not trying to suggest that we should go back. I’m not trying to suggest that unions were great in the past, therefore let’s return to doing it. And it’s just as simple as that. A) because empirically speaking, no society ever goes back to something it did before. And B) because that is a mistaken view of the past.
EV: So I have a question about the unions and labor organizing for sure, but really quickly before I get there, pushing back on this idea that actually the past was no better than the present, where do housing prices fit into that for both of you? Because that does seem to be one area where like, it definitely seems housing…
RB: Housing prices were better in the past. There’s no question. Yeah. By the way, I’m not trying to say nothing was better or worse in the past. You can’t compare states of time. Obviously some things can get better or worse. It is worse during the pandemic than before the pandemic. Right? I mean, there’s no question about that. Not for everybody, but like if we could prefer… Not have a pandemic, we would have not had a pandemic. And so I do think housing prices getting worse is, if you ask me to focus on one thing that governments, especially state governments could be doing. And I say this from my home state of California, although I spend a lot of time in Wisconsin as well, is dear Lord, just build a bunch more housing already.
EV: Mm, yeah.
ZK: Yeah. But there too, it’s really that answer, I think, Emma is really differential depending on where you’re talking about. So housing prices in Manhattan, housing prices in the Bay Area, housing prices in parts of Los Angeles are well beyond any reasonable affordability level. Housing prices in a lot of the country relative to interest rates and incomes are, are lower than they were 20 or 30 years ago. And it’s, it’s, you know, there’s a weird lattice there as well as expectations a house gives you, which you never factor into the conversation, but are part of it.
RB: Well, I mean, let me ask you about that Zachary. My parents, who were immigrants, who came to the United States with no money, but with educations, were able to buy an apartment in New York City that we lived in that was, you know, small, but good. And in fact small, but great. I didn’t know any better, and it seemed awesome to me. I definitely have no desire for more space. My understanding is that weighted for where population centers are… I mean, if you look geographically, I think what you’re describing about housing is true, but look, even in Stockton, California, if you go talk to folks, they say, my problem is, housing prices going up. Why? Because the housing prices went up in San Francisco, and it all cascades cuz it’s a big area. And so I’m curious, are you suggesting that we don’t have a problem generally speaking across the US with housing prices or just not to blanket generalize that it applies everywhere?
ZK: I think the latter, I mean there are clearly major housing issues and there are major rental issues. Even more than ownership issues. Meaning rents are often disconnected from actual housing prices, even though they shouldn’t be.
RB: Hundred percent.
Rent prices are rising well past their pre pandemic levels in multiple US cities. Realtor.Com says the median rent last month is up 8% compared to the same time last year. They’re also less homes on the rental market. Experts say that’s leading to bidding wars. Rents are at a new high in 44 of the US’ largest markets.
ZK: So let’s talk about the labor, and labor organizing and how that works. And also what you’re funding to try to solve some of that. Cause that’s an unusual niche, right? I mean most people who do venture capital and do investing are looking for like, you know, the hot dot unicorn.
RB: I’m three, gimme some crypto, bro!
ZK: And are not talking in terms of I mean you don’t describe yourself explicitly as—maybe you do and I’m just unaware of it—as kind of mission driven venture.
RB: I do not describe myself as mission driven.
ZK: And there are a few people who do, but most don’t.
RB: As a human being I am, but as a venture capitalist, I am capital driven.
ZK: So what early stage companies can solve for any of these huge issues?
RB: I don’t believe that early stage startups alone can solve for any of this stuff.
ZK: No, no, no, obviously, but, but you still are looking for that as one element of a solution.
RB: That’s right. I do think it’s one element of solution. And by the way, the, one of the ways in which America is struggling and could, is incomplete and could get better, is that despite all of the attention on the superstar entrepreneurs, the rate of entrepreneurship in the US has been steadily declining for decades. And that is a thing, like one of the areas where I do think education can be reformed. And I’ll answer your question directly in a second is I think we should be teaching entrepreneurship and, or working for yourself as a vocational skill. 17 year olds could be feeding families more often if instead of being geared to go to college and get a job as the default path, which I’m not saying that’s a bad path, it can be a great path, you know, finish school with your graphic design freelancing thing. And you could be in a position to do much better for yourself. So I think we’ve sort of lost the vocational thread there.
That said, the areas where I think startups can be helpful. Some of them I don’t invest in cause I don’t understand them. I think anything that reduces the cost of essential goods, healthcare, housing, namely education is all things being equal a very good thing. And there are plenty of people doing that. Everything from like mass timber startups working on making housing less expensive to, you know, we’re investors in Masterclass, which definitely benefited during the pandemic. And it makes a certain kind of learning much less expensive. I’m not gonna argue that it’s a substitute for the educational system.
Specifically around labor organizing, the first thing I’d say is it’s actually already happening without the label. So if you look at the tools that have enabled a lot of the most recent wave of organizing, they are the tools that venture capitalists funded. Slack, Discord, you know, to name two are among them. And then I do think that businesses that serve working people’s needs are really important businesses to fund that aren’t that popular. Not that many people are looking to fund them, but the other thing I think as a VC is people say, you know, you want to be contrarian and right, well it starts with believing something different than what other people believe. So if I was saying that same thing as other VCs, I think I’d probably not be a very good VC. The average VC doesn’t make much money, same way the average startup fails. And so now that said we’ve invested direct in some services that help organize. So one is a company called Unit that is, you know, the union busters have vendors. They’re a vendor that helps a workforce to unionize. And for the roughly 90% of American workplaces that can’t get a big union to pay attention to them because they’re in a right-to-work state or something, you know, or they’re just too small, they have no alternative other than rolling their own.
And so that’s one alternative. Another company we invested in called Open Collective hosts, kind of an insta start your organization. And a lot of the organizations that they host are mutual aid societies. So that’s another form of peer to peer support. And I think that what entrepreneurs choose to work on, what founders choose to work on is a matter of kind of cultural fashion. And so I just hope that more founders will recognize that that there’s a huge opportunity here, the same way I hope more founders recognize that there’s a huge opportunity for an older workforce. The startup that says we want to take people who are aged 55 and above and figure out how to create an incredible labor marketplace that really serves those people’s ability to thrive and do work. I would love to see that startup. I mean, I call it a silver unicorn. I’ve been, you know, Ai-jen Poo and I wrote a piece about it years ago and you know, the fashion just hasn’t yet moved in that direction.
EV: So Roy, when you were talking about labor organizing not being synonymous with unions, are some of these things you’ve mentioned what you mean, like the mutual aid organizations or can you just elaborate a little bit on that? Because my mind too went to unions.
RB: Yeah, for sure. Yeah. And everybody’s does. I don’t blame anybody for that. I think that’s what we, you know, we snap to grid on the historical norms, but yes, mutual aid societies are one, you know, nonprofits like coworker.org or One Fair Wage or anything organizing gig workers who by law can’t unionize because they are not that, you know, you have to be a W2 employee to be able to unionize under the law. And so those, you know, there’s an organization called United for Respect that built a network at first of Facebook groups of Walmart workers. And so there’s a lot you can do. Unions have unique powers under the law. So they’re very valuable under the law, but there’s a lot you can do in the absence of a union that can be powerful. I mean, one I’ve been talking to a bunch of CEOs about is who’s gonna be the first prominent company to have a worker elected representative on their board.
Since I started talking to people about it, by the way, you know, Rubio and others introduced this bill that would’ve made for a non-voting representative. I personally don’t really think it matters that much whether somebody has one vote or zero votes, what matters is that they’re in the room and that because they’re in the room, everybody has to take their perspective into account, and they have some agenda shaping influence, but of course it’s better to have a voting member. So those are a few of the things, but right now, one of the things I’m doing is talking with business leaders who are eager to reinvent how this relationship can work. And, you know, I’ll give you examples of where it doesn’t and just try to come up with new ideas and try them.
ZK: So, you know, when people talk about the worker representatives, they often point to Germany and some other EU countries where that’s part of the mix of there’s worker representative on the board.
ZK: And certainly there has been particularly center, center-left, left in the United States, a degree of wistful looking across the Atlantic.
RB: Yeah. Warren’s legislation, right?
ZK: Yes. Where there’s more equitable wages, where the differential between the average worker and the CEO is not 320 to one. It’s more like what it was in the 1950s in the United States, which is more in the 30 to 40 to one, one of the most amazing gaps I wrote about this a little bit in my last book, one of the ironies of American becoming more an egalitarian society is that when it was a much more hierarchical closed society, the wage gap between a worker and a CEO was, you know, a 10th of what it is today. And now we’re in a more egalitarian society and it’s a more unequal system, go figure. But the part of the challenge for an American context is, is the trade offs and the limitations one, right? We, you know, we do live in a culture that assumes that there’s no zero sum ever, right.
Everyone can have everything always. Now the result is many people have, have nothing ever while holding onto that dream of being able to have everything always. But, you know, just like there was a huge number of people, huge enough in a political context who fought any change in the estate tax, who would never, ever, ever have any conceivable way of paying the estate tax because it was essentially perceived as a taxation on their dreams. There’s a lot of pushback in the United States, even now against this idea of limitations and trade offs, right? Of wages, of capping things. Do we see that that tide has been particularly… I mean, if you said to an entrepreneur who’s starting a company, you should do this and you can make a lot of money, but the amount of money you can make is capped.
RB: Yeah. So there are dumb ways and smart ways to fiddle with the rules of the game. And there are obviously dumb things you can do, like capping how much somebody can own. Like that just seems silly and it could turn… But you know, does Elon need to be as wealthy as he is to have incentivized? No. I mean, I remember when he had that day where he briefly became, and maybe still is the wealthiest man on earth. And he was like, well, that’s strange. Let’s see. It clearly did not seem like that was the incentive, therefore, driving him. I mean, I can’t speak to, you know, his inner psychology, but the nuances in how—and how is a very unsexy thing to talk about because it’s much less interesting than talking about whether to do something and stark contrasts. But you know, the bottom half of American income earners did worse from 1962 to, I think the number went to 2015 or 16, than the bottom half in France, who did worse on a real basis.
I mean, that’s crazy. The bottom half in France got twice as good. And so I just think we’ve got this setup set up in a way that we can have more of lots of things. And I’ve loved, you know, the abundance agenda kind of thinking of writers like Derek Thompson and others who have spoken to that. I think there’s some things that are zero sum, but you know, let’s at least try to invent our way through. And one of the things that’s curious to me is how little CEOs seem to think that this is their problem. This is definitely their problem in addition, cuz it’s everybody’s problem. And I think that just as a matter of… I’ll make a prediction, I don’t usually make a predict predictions cuz I think our history of predicting things is terrible, but it’s hard to imagine we won’t have much more worker organizing if conditions stay the way that they’ve been.
In which case, and you know, we see the data, young people’s support of unions is at a historic high, you know, 77% of people under the age of 35 support unions historic highs. And so the coming wave is inevitable and it can go very badly. I mean, unions can do very bad things to companies. I actually think that unions should aspire to be symbiotic ,not parasitic on the companies where they arrive, cuz otherwise they won’t exist. You know, you eat the host, the host dies, you know, that’s not good. And I think the most important undiscussed leadership skill of the next 20 years for whether it’s a CEO or—by the way, I talk to nonprofit leaders all the time who are struggling with this—is gonna be, how do you collaborate with an organized workforce? And we don’t have no idea how yet. We just don’t. All of our defaults are union busting.
History made in Buffalo, New York. Starbucks workers at the Elmwood Avenue location voted to unionize, final tally 19 to eight. It’s significant because that is the first Starbucks to form a union at a company operated store ever in America. Here’s the moment that the union organizers found out.
EV: Roy, on that sort of unsexy theme of “how” that we’re gonna try to make sexy right now, the CEOs and the nonprofit managers that you’re talking to that sort of are on the cutting edge of this just by virtue of the fact that you’re having conversations with them about this, what are some of the things that they’re open to trying or are already trying?
RB: Yeah. Great question. So you have a bunch of people who consider themselves sympathetic in theory to organized work. And then when they get the email from like, email@example.com simultaneously with a public campaign and a website, they freeze up and get really defensive. And by the way, that’s an understandable reaction. They’re being attacked. So of course they could be defensive. And so the best ones I think are the ones who recognize when it is inevitable in their organization, move to voluntarily recognize the union and try in good faith to have a discussion of mutual interest. I mean I heard earlier today that Stanford, when it was negotiating at some point, I don’t know when, with one of the unions that our president on campus sent both the union folks and its own people to a workshop to learn how negotiate constructively. And apparently it was a terrific process for everybody involved. So it’s that kind of assumption of win-win starting there. And if things break down and you need the threat of a strike, like I recognize that to have collaboration, you sometimes need the threat of conflict cuz it keeps you at the table, but those are the cluster of things that I think people are beginning to experiment with. And I think it’s gonna require experimentation from labor and from business.
ZK: I mean that was a California example. So they probably included like a, make your own kombucha followed by a yoga workshop.
RB: It is possible. Although I believe that the negotiation training they went to was at MIT. So…
ZK: Well there goes my silly line out the window.
RB: Yeah, no, but, but look, I mean, you know, let’s make kombucha with people may have to be the Northern California way.
ZK: And funny that they would’ve been said to an MIT negotiator. Look, this is clearly more and more although as part of the problem is often there’s a trend toward increasing voluntary union organizations and voluntary recognition of union organizations on often what one would call more worker friendly, liberal lead institutions that tend to embody the… So it’s almost like the places that are kind of unionizing now are not the places where the most egregious examples of workplace equity are, and whether that’s gonna lead toward more, you know, the meat workers who we talked all about in the spring of 2020 when it became clear that there was an incredible concentration of meat production in the United States. Most of these workers were either immigrant labor or non-documented immigrant labor had basically no rights for being told to go into these places where they were not only getting COVID, but had no healthcare to take care of them if they were, and now we talk nothing about this, right? We had a moment of like, wow, look, there’s actually people who are vital to this supply chain in a way that we never look at and we never think about, and that’s where the rising wages in general is an interesting phenomenon. Cause it’s happened in a much more kind of miasmic organic fashion than in an organized top down fashion which I have to say, like I would not have expected of the past years. That was not an outcome that seemed easily on the rise.
RB: I totally agree with that. Just to say, when I started doing future of work stuff, when you say what we were talking about, you know, I’ve often find that, that “we” is like the chatterati, right? It’s the, you know, what we were talking about was will the robots take all the jobs? We were not anticipating a labor shortage and, you know, there are data to suggest that more workers and more technologicaly are actually complementary. And so that they’re not as strict tradeoffs as we may think, but yes, I mean, it’s a long winded way of agreeing with you.
ZK: And there is this interesting question, you know, I’ve talked to Emma about this, about like the difference between labor forces that are, that we know about, and people clearly finding a way to make money that just doesn’t quite exist in a statistical framework. And economists, by the way, haven’t figured this one out either.
RB: What do you mean by that?
ZK: I mean like they are… You’ve written about the Great Resignation. There are all these people who have dropped out of the workforce. But there has not been an uptick in measurable poverty, that is one to one associated…
RB: With the dropouts in the workforce. Yeah. Right.
ZK: So there’s, there are clearly people finding a way to generate income from something called work that is statistically invisible. And you know, Emma and I have talked about this cuz obviously, you know, the Greek government’s ability to figure out who’s earning anything from what has been highly limited for years and remain so. I, I just wonder, like when you, you mentioned a CEO saying there’s a wage you said there’s not a job. What was, what was your line on that?
RB: it’s not my line. It’s not a job shortage, but a wage shortage.
ZK: Right. But then the question is what, what are those people doing? Are they all doing gig work?
RB: So I’ll say the abs… Like if you ask me about changes we need, one of the changes we need is better data. We still use annual household income as the main way of measuring the financial wellbeing of a person. And we know income is volatile. We know that there’s a huge difference between making $5,000 a month every month and making it all in one quarter, cuz you’re a real estate broker and we have no great data about that. I hope that this is one of the things that government can continue to invest in is much better data. And so I don’t have any statistical, I mean, we’ve got one Michigan survey, but I don’t really know how the, the basis to give you a factual answer to your question. The other thing that I think can tie to all this, and this is, you know, definitely of interest to me as a VC on things we can do, it may result in better data, certainly better learning, is one of the most important things I think government can do is up its investment in research, in scientific research of all kinds, make those investments much more effective per dollar, which there’s been a lot of discussion about how to do that. And if you do that, you kind of lift the frontier of what we can do, cuz government is the first VC. Like I come to collect the scraps at the end, once government’s taken the real big bets on, you know, the scientific research that allowed us to have an mRNA vaccine in the first place. And so I’m a believer in that as part of milieu as well.
ZK: Let’s turn to that for a moment.
ZK: One of the reasons why government or people have pointed out that government is in a difficult position when it comes to acting as a mega VC as a mega allocator of early stage investment, is that unless it has a military application, which government can actually defend investing in a lot of things, some of which might not work, that that failure ends up being a political liability in a way that it isn’t when you invest in ten companies and four of them just don’t work out.
ZK: And that’s been like the, you know, so the Obama administration was roundly criticized and you know, it became a mark of shame that there was one investment in one solar company called Lyra that became a stalking horse for all that was wrong with government allocations of capital, even though, you know, frankly it was one that failed when there was a lot that succeeded. But that’s part of the problem with government is it gets excoriated for those failures. Whereas you, I mean, look, we all eventually…
RB: No, no, no. I have the best job in that way. I could fail 99 times out of a hundred. And as long as I get the hundredth one really, right, I’m a genius. So it’s perfect for me cause I’m wrong a lot. But so what I’d say about that is, again, it’s in the “how.” I don’t think the government as currently constructed should be picking companies or picking winners. I think it should be funding scientific research in universities and other structures that work and it should try little grants and it should try big grants and it should try fast grants. I mean, you know, Patrick Collison and Tyler Cowen big advocates of changing the structure of how some of that money gets distributed. Philanthropy should experiment and government should copy it, all that stuff. If we wanna have government monies invested in companies, well, there’s a model for that. It’s called having a sovereign wealth fund, and we don’t have that. But if we have that with, you know, professionals picking where to allocate assets, it works for lots of other government institutions like pension funds and that kind of thing. But our current structure both politically fails and just more important than politically failing, it just fails the competence test. We’re just not set up to have the right people doing that kind of work.
EV: The Biden administration did just put in some billions into antiviral research. That seemed like a really good idea, but it also seemed like it wasn’t very much paid attention to, like if you talk to just somebody off the street, like they’re not gonna necessarily know that a few billion just got put into researching everything from the cold to Ebola to coronavirus to make antivirals. So that the idea being that we have an antiviral ready on the shelf, the next time something really terrible happens. But it doesn’t seem to be a talking point.
RB: Well, I mean, I think this is one of the challenges is I love The Week magazine and one of the sections in it is boring but important. And you know, it’s, this is a struggle is the things that capture our attention and the things that matter to our future are so rarely the same things.
ZK: Well, that’s certainly something we’ve struggled with in doing the whole Progress Network, right?
RB: Well, but I think you, what, the reason I wanted to be in this conversation with you, other than knowing you to be thoughtful and all of that is I think we all have to try to figure out how to get attention to the things that are important. And I mean, I look, I put some of my money where my mouth is, cuz I funded a grant program for storytellers who are trying to tell creative new stories about organized labor just to learn, to give us fuel for the imagination and all that stuff. And so yes, we have to figure that out.
EV: The fuel for imagination is really important because as you are speaking, I realize there’s this labor organizational tool that I never would’ve thought of as this, that went around around three or four years ago in the journalism world where somebody started a crowd-sourced Excel spreadsheet with everybody’s title and salary and gender and all sorts of information. I have that thing saved on my computer and I will forever because this is the single most useful thing that I’ve had at my fingertips. And I didn’t think about it as a labor organizational tool. I just thought about it like, oh man, someone really smart, you know, thought of this and how great.
RB: And to Zachary’s point earlier, I mean, I think feel like it’s more than semantics in the sense that when we attach these things to each other and point out, oh no, that was labor organizing. That was part of a movement of things. All of a sudden, it all takes on more meaning. I mean, you know, my shrink used to tell me the story of the three ditch diggers. Three people are digging a ditch and a tourist walk or a traveler walks by and goes to the first one and says, you look miserable. Why are you miserable? He’s like, I’m digging a ditch, obviously I’m miserable. Second one seems okay. Why are yo okay? Well I’m helping make a house. And the third one is just beaming. Like, you know, shirt off, smiling in the sun, doing exactly the same work. Why are you so happy? He’s like, I’m creating an empire. And the point is that the… It can be used against us. But when we choose to put these actions we take in the context of something bigger than ourselves, that’s when I think it can, it can get our blood stirring and move us toward change.
ZK: So talking about the third, right, Silicon valley venture capital in tech, particularly in the past 20 years has had a surface of ditch digger number three.
RB: Yeah, right.
ZK: That there is this kind of, well it’s endless…
RB: I know, social local mobile advertising to change the world!
ZK: Now you could say on the one hand that a lot of it is naive. A lot of it’s a smoke screen for self-serving greed, all true. But without that kind of naive utopian belief in one’s capacity to change the future you don’t necessarily get a lot of people naively trying to change the future. So I wonder now, like one of the complaints now about this ecosystem of money and startups and venture is billions of dollars are pouring into this ecosystem while the meat packers in middle America remain undocumented and unhealthcared. And a lot of the stuff that it’s pouring into are the, you know, I’ve got an app that’ll help you figure out your apps, but clearly, you know, there’s, there’s still this money cuz people believe that they’re gonna have return. There was a, you know, massive pushback this year on the Super Bowl, cuz half the commercials were crypto, just like half the commercials in 1999 were from startup companies that didn’t exist a year and a half later. So what’s your, what’s your view on this? Is it, is it endless amounts of capital chasing self-serving return? Is that, is the ratio gotten really out of whack where everyone just wants to be…
RB: Yeah. I think that’s what capital is supposed to do for better and for worse. So I think that part is the system doing what it was designed to do. I struggle to talk about this without just recognizing obviously how biased I am. I’ve chosen… I worked in government, I worked in big corporations. I worked in nonprofit. I’ve chosen my occupation because I think it’s a way that I can support those who are making change. So bias notwithstanding I believe that most of it in the scheme of the economy as a whole, the amount of venture capital is actually a rounding error. If you go to like a big asset allocator, somebody’s got a lot of capital like yeah. You know, I put some small single digit percentage in VC because you know, we got to to see what’s happening, but not, it’s pretty small in the grand scheme of things.
It’s just so visible because it talks about itself constantly and markets itself that it makes itself an easy target. And all of the powerful people in tech who complain about being targeted by the media, it’s like, you’ve been marketing yourself nonstop for decades and you’re powerful. Of course the media is gonna look at you. And by the way, the media should, that’s what the media’s supposed to do. The media’s supposed to examine power, I mean, among many other functions. And so they’re not gonna say thank you for all of your work. They’re gonna provide a more critical lens. And so I guess, I think in the grand scheme of things, it’s not that big an issue, but I understand why it is such a visible issue and such a symbol of the problems. And do I wish more founders wanted to do more things that I think could be wildly valuable? Yeah, I wish more founders did that.
And the only way to get at that I think is to show people the examples and talk to them about the opportunity. But, you know, I do think the only way out is through, in the sense that if you are trying to do something noble, you’re a company that’s trying to change the world—and I call this the evil twin problem—and somebody else is your direct competitor, and they’re doing exactly what you’re doing, only more evil. They’re you prime. If their strategy wins, it doesn’t matter that you were better cuz you don’t exist. So you have to win and be good. And so that’s the challenge.
EV: So since Zachary brought up crypto and the Superbowl, and of course we all love to talk about crypto… You put out this take, that was someone else’s take on Twitter that crypto and NFTs, web three, it’s like pseudo religions, like going to church with values they admire. And what if the church could make you money? And I was like, oh my God, it is, it’s prosperity theology.
Now the Bitcoin situation and the cryptocurrency situation is religion. It’s not an investment, it’s a religion people. We believe that people think they’re getting richer and that’s fine. As long as the music continues to play it’s great. And as Citibank’s past president said, everyone has to get up and dance. But once that music stops, then we’re gonna be in real trouble. So people should not look at these cryptocurrencies as a means to invest. It’s a means to speculate and have fun, but then you gotta go back to stocks at the end of the day.
EV: But that kind of has a connotation that it’s at the root of it a little bit like snake oil salesmen. And is that how you would see it as well? Or is there a there, there?
RB: Well, the other person’s idea, just credit where credit is due, is that the world was ready for a secular religion. And I just pointed out that crypto and web three may have been stepping into that place and you see the same kind of thing in stonk discussion culture and all kinds of things. And it gets to me for me a little bit to what Zachary was saying earlier is that you need a little bit of zealotry and fervor for people to do the things that they need to do. You know that George Bernard Shaw quote about the reasonable person, he probably said reasonable man, sees the world as it is and adapts to it. And the unreasonable person sees the world as it is and makes it adapt to them. Therefore, all progress depends on the unreasonable person. So you need some of that. And so I think that is in some measure, a positive thing.
And there’s no question in my mind that the vast majority of web three crypto stuff happening is nonsense, but by the way, the vast majority of startups fail and that’s okay. It’s a process where the natural experiment must happen. The awful ideas and the brilliant ideas look, punishingly similar to one another. And so I’m not bothered by that. I mean, it’s all big boys and girls, you know the only part that bugs, big boys, girls, and others is, the only part that really bothers me is the thought of dishonesty and scams. You know, so Theranos bothers me a lot. Crypto scams bother me a lot. Venture capitalists losing a billion dollars on stupid crypto investments, they know what they’re doing. They signed up for the risk. Fine. And I think good things will come of it. Even if it’s just stone soup, good things will come of it.
ZK: And that good stone soup analogy. Love that. I love that book, I read it to my kids too. People built the railroads, the telecom boom in the 1990s, you know, everybody invested in all those went went belly up, but you were left with an incredible transcontinental transportation artery that made possible…
RB: Communications infrastructure, same story. Yes. Right.
ZK: And so it’s when people believe again that all of that can happen with an efflorescence of nothing but profit and joy rather than the inevitable bouts of failure and struggle.
RB: That’s right.
ZK: And that’s where it gets lost. And that’s where I think the commentary does.
RB: Yeah. This sense of, you know, no matter what you do. I mean, look, when I hear like somebody telling me that their taxi driver said, you should buy Bitcoin, cuz it only ever goes up. I’m like, oh God, this is gonna be horrible. And so as long as people are well informed, making good choices, which is not for me to judge, but of course ultimately for them to judge, all power to it, I don’t know what’s gonna work and what’s not gonna work. If I knew I wouldn’t need a portfolio of investments.
ZK: So final question, are you seeing more things that excite you over the past few years or not, or are you seeing fewer things?
RB: You know, you were alluding earlier to the overinvestment in certain kinds of infrastructure and the boom and bust cycle and made me think of Carlotta Perez’s writings around technological revolution. And I think I go in waves on this that have nothing to do with what founders are doing. I actually think founders have a steady stream of doing really cool stuff that is more or less immune to the weather of how the market’s doing or you know, what was in the news that year or anything like that. I, by nature am a curious person. I get really into stuff. I mean our most valuable company by valuation is a shipping broker, Flexport. We, you know, if not the first VC we invested alongside the first VCs who are in that company and it’s been fascinating to me. So I’m easily entranced by the details of how things happen.
And then what happens is you get used to it and then you get a little disappointed with things and you kind of go through cycles. And I think where I am right now is I’m in a pretty optimistic place. If you’d ask me a year ago, I think I would’ve said that I was sad that a lot of the leaders in tech seem to be just to be putting so little effort and so much tweeting into trying to fix the world’s problems. And now I do see people buckling down and trying to do stuff. I mean, I see newly wealthy tech people trying to figure out how to be good philanthropists and get civically engaged through some communities that I’m involved with. And so you’re catching me in an optimistic moment, but I will admit that I don’t think that’s a function of what’s happening in the world. I think that’s a function of the human desire to see cycles. One of these rules is people are just gonna keep inventing stuff and we can make it easier. We can make it harder with the rules of the game, but I hope they do cuz that’s how, you know, our world gets better in large part by writers writing novels and startup founders making companies and blah, blah, blah, God bless.
ZK: That is a perfect valedictory note to a perfect discussion. So I wanna thank you for joining us today and we’ll see how those and flows go over the next few years. I’m sure we’ll keep talking about them.
RB: That was great. Thank you both.
EV: Thank you, Roy.
ZK: So that conversation with Roy had for me an interesting cadence in that he like a lot of us is acutely aware of the things that are not working, the inequities of massive wealth and struggling work, of golden age of capital juxtaposed to a stagnant age of labor and what that means within a societal framework. All true. But he also had the kind of ebullient enthusiasm of investing and seeing what people are doing creatively and constructively for the future. I was struck by that juxtaposition of the awareness of problems on the one hand, but great enthusiasm for solving them on the other, which is kind of the spirit in which we do these conversations and promote The Progress Network anyway. But it was an unusually acute specific iteration of that I think.
EV: Yeah, no, I would agree with you about that. And if there’s something really interesting about, I think a lot of our guests have this, this sort of like ability to sort of sit in the mess. And like Roy said, the only way out is through. And so he knows that you have to go into the mess and through it. But I agree like it’s definitely like on the one hand, a really striking explanation of the problem. And on the other hand, a really striking explanation of we’re gonna solve this problem. I don’t know exactly how, but we’re working on it.
ZK: And that points to this ongoing, I guess, challenge on the one hand, but embracive one on the other of sensibility being the root of solutions, rather than something specific. You need to start from the right place in order to end up in the right place. Meaning you have to start from the right sensibility in order to end up in the right actual material place. And that place of there are so many people doing so many things enthusiastically to try to address what are some really systemic faults and failures is the only way through that mess rather than railing against it being broken with anger, outrage at the injustice, I suppose at times, railing against that has some political capital and ability to galvanize humans. But there is always that question of, okay, what are we gonna do now? What are we gonna do about it? And usually the people are gonna do something about it tend to be more utopian and looking forward and thinking they can change things and thinking they can do things and yes, in a market economy probably thinking they can make some money doing so.
EV: I’m wondering if anyone listening is thinking like this is a really over generous description of certain tech entrepreneurship or VC world or whatever your target may be. But you pointed out and I think Roy too, in the conversation of are we ascribing like this really generous viewpoint to people that are really just out there to fatten their own pockets.
ZK: And that’s always a risk and it’s probably true that most human beings are some messy combination of both, you know? And to some, it is that embracing of, I said this a bit when I was talking about Brown Brothers and the book that I had done that you can be selfish and of service. You can be self-serving and of service. You can be selfish and selfless. That is fully possible for human beings to be at times a problematic mix of both tendencies and that if you’re looking for purity and you insist that it be one or the other, okay. But you’re gonna find that most people are some odd, uncomfortable, but utterly human combination of both.
EV: And so watch out for narratives that don’t allow, like don’t allow that space because you they’re gonna lead you in a funky direction.
ZK: But for now it’s been a great conversation with Roy Bahat. And thank you all for listening to What Could Go Right?. Please check out theprogressnetwork.org and get the newsletter, if you have not already. It’s free and it will cost you only time and gain you only a positive perspective on a complicated world.
EV: Thank you, Zachary.
If you wanna find out more information about The Progress Network and What Could Go Right?, Please visit our website at theprogressnetwork.org. And if you want something other than gloom and doom when you open your email in the morning, you can also sign up for our weekly newsletter. It’s a roundup of progress news from around the world and that’s at theprogress network.org/newsletter. And please, if you like the show, if you could tell a friend, share an episode, leave a rating, review on Apple Podcasts or wherever you listen to podcasts, that would help us out ton. What Could Go Right? Is hosted by Zachary Karabell and Emma Varvaloucas. The show is produced by Andrew Steven and edited by Jordan Aaron. Executive produced by Jeff Umbro and the Podglomerate. Thank you so much for listening.
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