What is entrepreneurship about? Creating new things, making money, or adding value?

A series of recent blog posts and news items – here, here, here, here – have me worried about how Silicon Valley* and the startup world relate to the rest of culture and society. There’s a reason Wall Street has a bad name; Silicon Valley shouldn’t have to end up like that. Part of it is just not saying really silly, out-of-touch stuff. But an even bigger part has to do with what startup culture is really about.

I’m only an observer, so far be it from me to really define what startup culture is or isn’t. But it seems to me there are a few related factors that are emphasized to different degrees by different people and groups. They are: building new things; adding value; and making money.

In an ideal world, all three fit together. But it should be obvious that it’s possible to make money without really adding any value to the world, just as it’s possible to create something that’s new but doesn’t add value. And it’s the value-add piece of the startup and tech culture that I really think needs to be emphasized. I love hearing that community talk about their obsession with solving difficult problems, with providing utility for their users. And I actually think, considering how much money flows through startup land, the culture there does at least an OK job of not making it all about financial success.**

So what I’m a bit concerned about is a culture that’s overly obsessed with newness. Drop that heuristic – that new is good – into most places of the world and it’d be an improvement. But with the cost of creating something new now so low (at least in the software space) might Silicon Valley culture be over-emphasizing the desirability of merely bringing new things into the world?

A friend asked me recently what the latest wave of internet-enabled technology had actually done to improve the world, and I had to think a bit longer than I was comfortable with. I think there are compelling answers, but we have to provide them, and argue for them. It’s not enough to simply assume that new equals better.

If Silicon Valley wants to avoid sharing Wall Street’s reputation, it’s going to need to think about how it relates to the rest of society. In doing so, I recommend emphasizing a culture of solving problems and adding value, rather than just focusing on what’s new.

*I’m using ‘Silicon Valley’ more to refer to startup culture broadly than to the geography

**Maybe my view from the East Coast is skewed on this one and it’s not as good as I think

Open != Competition

In the spirit of blogging more regularly, I just want to quickly flag something Fred Wilson said this month, though I don’t have the time to give it the attention I’d like to. Here he is, via Business Insider:

However, now that Android is winning, he [Wilson] says, “My new worry is that Android could run the table.”

After seeing that Google has 80% of the smartphone market, and more hip tech snoots are into Android, he’s worried that Google will completely control the smartphone market.

He’s hoping Apple releases a truly low-cost iPhone to gain marketshare.

“I find myself rooting hard for Apple now. I sense the danger they are in and I don’t want either smartphone OS to be so dominant that we lose the level playing field we have now,” says Wilson. “It’s very important for startups, innovation, and an open mobile ecosystem for all.”

Business Insider goes on to zero in on the idea that Apple could be in trouble. I want to touch on something else.

I like Wilson’s writing a lot, but I am very confused by the implication, as I read this, that more competition in the smartphone OS market will mean a more open mobile ecosystem. Really? Apple is historically the antithesis of open. And while Android isn’t Linux, there is a very real sense in which it is more open than iOS.

Put another way, “open” and “competitive” are different, though more of either of them tends to mean less control by any single company in a given market. That doesn’t mean they’re the same. “Open” is vague and means different things in different contexts, so let’s go to Tim Wu’s definition:

First, “open” and “closed” can refer to how permissive a tech firm is, with respect to who can partner with or interconnect with its products to reach consumers. We say an operating system like Linux is “open” because anyone can design a device that runs Linux.

We can agree, hopefully, that by this definition more Apple market share is unlikely to mean more “openness” in mobile.

That doesn’t mean there’s nothing good about a more competitive landscape, or nothing to be feared by Google’s dominance. Ideally, I’d like to see relatively more open systems like Android push out more closed systems like iOS, but in a way where no single company has inordinate control of the open system(s) that are left. That’s not how things are looking with Android.

So we can argue about whether we need Apple and iOS as a counterweight to Google, and whether such a counterweight is good for startups and for innovation. But I don’t see the case for an increase in Apple’s market share leading to more openness.

When there is no one right tool for the job

“The problem with [a] spending freeze is you’re using a hatchet where you need a scalpel.” -Barack Obama, 2007 presidential debate

The implication of the metaphor above is that it’s important to use the right tool for the job; you wouldn’t attempt surgery with a hatchet, after all. It’s a good line, especially when talking about cutting. But, of course, you wouldn’t try to perform a surgery only using a scalpel either. The list of surgical instruments is long, and the procedures are complex enough that there is no single tool that can itself get the entire job done.

McDonald’s and Wages

This idea that any single tool is likely inadequate for a complicated job has been on my mind lately, following an interesting debate about the wage that McDonald’s pays its employees. In particular, Business Insider’s Henry Blodget and Josh Barro have nicely captured this debate in competing posts (and in the short video debate below).

Blodget says McDonald’s just needs to suck it up and freely choose to make less profit in order to pay its workers more. Barro makes a standard economic argument to the contrary, suggesting that should McDonald’s do so, they will suffer for it:

Nor is the enforcement of such a moral norm likely to be an effective way to advance the interest of workers… If McDonald’s decides to pay more than it must, it can be outcompeted by competitors who will feel no such obligation.

Instead, he says, better public policy is the answer. Even there, though, there are limits. A higher minimum wage would almost certainly be good policy, for instance, but raise it too high, Barro argues, and you will start discouraging the hiring of low-wage workers. (Here’s a primer I wrote on the minimum wage a while back.)

If you care about the plight of low-wage workers, this can all be a bit depressing. Simply demanding that companies treat their workers better seems problematic, and at least some relevant public policies have their limits.

The answer, it seems to me, is to rely on multiple tools simultaneously. To pressure companies to treat workers better, while also raising the minimum wage, expanding the earned income tax credit, pursuing sound macroeconomic policy, etc. Rather than relying on any single approach to solve the problem on its own, hope that a number of levers can each make a dent.

Using the Whole Toolbox

There’s nothing original about the idea that thorny problems are unlikely to be solved via a single mechanism, and no doubt this point has been made by many authors in many contexts. But I want to build off one such formulation, offered by Lawrence Lessig in his book Code 2.0. His point, visualized below, is that behavior is shaped by laws, social norms, the market, and by physical architecture. He goes on to suggest that software defines the “architecture” of our online behavior.



As I’ve been thinking about issues like the one above, I’ve kept coming back to Lessig’s drawing, but have mentally added several components. Here’s a very non-pretty articulation of what I’ve been thinking of:

Toolbox - Multi-lever thinkingTechnology: I’ve renamed “Architecture” here, to focus on the role that technology can play in solving a given problem.

Peer production: Though likely not relevant in the wages scenario, peer production – best articulated by Yochai Benkler – is a powerful new tool for thinking about a host of issues. It involves lage-scale collaborative production, often enabled by the internet and typically lacking hierarchical decision-making structures. Think Wikipedia, Linux, etc. I situated it between norms and technology to reflect its reliance on both.

Norms: Our commonly held knowledge, customs, expecations, etc.

Social enterprise: Situated between norms and markets, any commercial effort that is explicit in its desire to improve human well-being in ways that diverge from profit maximization. If a company decided to pay its workers more, for instance, not out of a belief that doing so would increase their share price, but because they felt it was the right thing to do, that would count. An enterprise specifically devoted to making a product or delivering a service because that product or service would help solve a certain social problem would also count.

Market: In my view, it’s wise to frequently ask, when confronted with a problem, could competitive markets solve this? And it’s wiser still never to assume the answer will be ‘yes’.

Market-based policy: Any policy that seeks to channel the benefits of markets. For example, “sin taxes” on things like booze, cigarettes, or soda seek to utilize market incentives to discourage unhealthy behavior. Cap-and-trade for climate change would be another example.

Law and policy: Any attempt to solve a problem through legislation or government rule-making.

Oftentimes, I end up approaching social problems primarily through the lens of policy. What’s the most efficient legislative fix to the issue? Or I might consider what role markets could play, or technology. But seldom do I consciously approach a problem with this entire toolbox in mind. It’s a goal of mine to do so more regularly.

I’m sure in some cases utilizing multiple tools could lead to some crowding out, where the use of one tool disrupts the use of another. But my guess is that in our messy world, we’re most often better off utilizing not just a hatchet, or even a scalpel, but the full range of tools at our disposal.



Is social media bad for us?

For years, the idea that the internet and social media are making us [insert ill here] has been a common trope in newspapers and magazines. It’s making us lonely! Narcissistic! We don’t communicate anymore, like really communicate, man! Despite the frequency of such claims, the evidence has pretty roundly contradicted it, as I’ve written seemingly over and over.

But is that the end of the story?

The honest answer – one that I’m loathe to admit sometimes, partly out of bias, and partly out of a frustration with the anti-tech bias of so many critics – is that we don’t yet really know.

So, in this spirit of reasonableness, I’m recommitting to keeping an open mind on this issue. I haven’t yet given some of the more credible critics the chance they deserve, but to start, here’s a list of interesting and recent arguments that give me pause.

Via BuzzFeed:

According to a University of Michigan study published yesterday in the online journal Plos One, Facebook use was seen to predict declines in the well-being of surveyed participants, negatively impacting both how people feel from one moment to the next as well as overall life satisfaction.

Separately, what impact are screens and the web having on children? Here’s an NPR segment that comes highly recommended:

Very young children, like many of their parents, can become totally absorbed with mobile touch-screen devices. Some argue that compared to the essentially passive activity of watching television, children and even toddlers using i-Pads, i-Phones, Androids and other kinds of touch-screen devices can have a far more stimulating, positive and educational experience. But parents and their children are way ahead of any research: No one can say for sure how using this technology shapes developing brains,if at all. Please join us for a conversation on young children and touch-screen devices.

Finally, here’s one more critical take that comes recommended from a former editor of mine.

Too often, tech critics have not only taken on straw men, but done so with an almost willful disregard for existing evidence. But that’s no reason to ignore serious, thoughtful analysis that questions the value of technology in our lives. I plan to give all the authors above the consideration they’re due, and hope you will as well.