Is This the Start of a Revolution?
Serial entrepreneur turned venture capitalist Kevin Rose revels in creating controversy. Many say he is an a-hole. On that front, I reserve judgment. Many tech entrepreneurs, like Steve Jobs, were also considered a-holes, but at least their a-holiness was expressed in pursuit of great products. Rose, not so much.
Though it's very easy to ignore the so-called jerks that inhabit every industry, it is a rare event when said jerk is worthy of a public demonstration. That's exactly what happened to Rose when the Counterforce, a Bay Area activist group, gathered to rally in protest at his San Francisco home last weekend. The protestors complained that as a partner at Google Ventures, Rose "directs the flow of capital from Google into the tech startup bubble that is destroying San Francisco. The startups that he funds bring the swarms of young entrepreneurs that have ravaged the landscapes of San Francisco and Oakland."
But it's not just a-holes who are the subject of their protests. In January, they demonstrated at Google engineer Anthony Levandowski's residence about what they say are the company's evil surveillance practices.
Google also caught a bunch of grief from the Counterforce and others over the private transit buses Google uses to shuttle employees to and from work. The buses, apparently, represent the gentrification of San Francisco by the elite, snobby, rich, tech hipsters "ravaging" the cityscape. Gone are the days when Bay Area environmentalists would rain kudos down upon Google for sparing the air with its mass-transit solution.
In general, then, the complaints of the Counterforce and its ilk are pretty illogical. They appear to center on an utter disdain for capitalism in all its forms, and the groups have singled out Google as the poster child. As we all know, these marauding bands of hipster entrepreneurs out ravaging the Bay Area are spending millions of dollars that would not otherwise be getting spent, buying lots and lots of goods and services, which, as it always does, creates more wealth among all the people selling. Some call this phenomenon economic growth. As a VC, I am guilty of creating economic growth, too.
I regularly travel this country, and I see regions in many states focused on becoming the "Silicon Valley of (fill in the blank)." The past five years have seen New York City explode onto the tech-startup scene. Cornell University is building a huge new tech center in NYC that will rival Stanford University. Boston has a booming biotech/life science segment, a specialization that evades Silicon Valley. And then there is Silicon Prairie--Boulder, Colorado--anchored by Brad Feld's Foundry Group. Let's not forget Seattle.
Detroit, our once great industrial capital, is teetering at Third World status. In its attempts to revive, it would welcome Rose and those like him with open arms and give him an open mike to spew whatever he wanted as long as he could attract some of those very highly paid workers willing to ravage their community with a little of their wealth.
So the question is this: Are these latest protests simply the collision of a whack-a-doodle fringe activist group and some overly abrasive tech characters? Or is something deeper going on?
I argue that the answer is both.
Income disparity is at the core of the activist message, despite how unfocused and illogical its actions are in the service of this message. Concerns about this disparity are not just the province of the SF activists. The Democratic Party has made it clear that income inequity will be the centerpiece of the 2014 midterm elections.
The devil will be in the details of how this disparity is rectified. I've lived through three tech boom-and-bust cycles. I can say with authority that the local economies thrive when things are booming, and when times are bad, the pain is disproportionately felt by the disadvantaged. Reducing startup investment, then, will accomplish the exact opposite of what both Obama and the Counterforce hope to achieve. More clear, logical, and economically astute heads must prevail in this conversation.
Though the Rose debacle may be silly on its face, it speaks to a bigger issue that we cannot afford to allow to be debated on the fringes. Activists need to study the history of economic growth and be grateful for the abundance of opportunity in Silicon Valley. And Rose, along with all of us in financial services, needs to think about what we bring to communities more holistically. A "let them eat cake" attitude has a history of unhappy endings.
BARRY SCHULER | Columnist
Barry Schuler is managing director for DFJ Growth and the former chairman and CEO of America Online. He is credited with being one of the pioneers of the modern Internet.