Capitalisn’t: Silicon Valley’s corporate culture problem

Dec 27, 2019

Sections Economics

Does Silicon Valley have a capitalism problem or does capitalism have a Silicon Valley problem? On this episode of the Capitalisn’t podcast, hosts Kate Waldock and Luigi Zingales sit down with Mike Isaac, New York Times technology reporter and author of Super Pumped: The Battle For Uber, to find out if many tech startups have a toxic corporate culture issue.

Luigi: There was a time when being an investment banker was cool. Then came the financial crisis, and investment bankers started to hide at cocktail parties pretending to be tech guys.

Kate: And then came the Cambridge Analytica scandal, and tech guys started to hide at cocktail parties pretending to work for startups.

Luigi: Then came a time when working in a Silicon Valley startup, like Uber, was cool. Then, 2017 came, and Uber was accused of every possible crime, from intellectual theft to promoting a sexist culture. From paying bribes in foreign countries to knowingly buying defective cars for its drivers. 

Uber employees started to hide at cocktail parties, pretended to work for, what is the next cool thing, Kate? You certainly know.

Kate: I actually don’t know if I know. Here’s what I do know. I have a bunch of friends who are former Facebook employees. Some of them work in medical technology companies or, I guess, in healthcare startups, but that’s not OK, because they can manipulate prices, jack them up and hurt consumers, and so they hide. And then one of them actually works for the DNC doing tech stuff, but that’s not OK, because maybe the DNC is manipulating the election. And so, I think that the best example I have is somebody who went to go work for corporate social responsibility at Goldman Sachs, and his job is considered the best of all.

Luigi: So, maybe it’s full circle. Now, we have the socially responsible investment bankers that are returning to be cool.

Kate: Yeah.

Luigi: And I wonder how long it will take until the new cool thing becomes synonymous with greed, corruption, and failure.

Kate: Exactly.

Luigi: Is this just a Silicon Valley problem, or is it a capitalism problem?

Kate: From Georgetown University, I’m Kate Waldock.

Luigi: And from the University of Chicago, this is Luigi Zingales.

Kate: You’re listening to Capitalisn’t, a podcast about what’s working in capitalism today.

Luigi: And, most importantly, what isn’t.

Kate: So, to reflect on this question of whether corporate culture in Silicon Valley is a Silicon Valley problem or a capitalism problem, we have an exceptional guest, Mike Isaac, technology reporter at the New York Timesand author of the recent book Super Pumped: The Battle for Uber, filled with details about everything that went wrong at Uber. Welcome to the show, Mike.

Mike Isaac: Yeah. Thank you for having me. The last two months, I guess, have been pretty crazy. It’s been nonstop talking about a bunch of different cultural issues with Uber and how this company was operated, so I’m kind of interested and curious as to what you guys want to talk about with me. I thought you guys usually like to talk about capitalism and not the cultural effects of it, but let’s see what we can get into.

Luigi: Yeah, you’re right. It used to be the case that economists did not want to talk about culture at all. When I did my PhD at MIT, at the turn of the ’80s, the word culture never entered my classrooms.

Kate: That wasn’t really the case with me, actually, I’m sure most of our listeners are familiar with Luigi’s name, but I have been hearing about Luigi ever since I was, I think, a sophomore in college, when I took cultural economics, and half of the papers on the syllabus were written by the one and only Luigi Zingales.

Mike Isaac: Oh, wow.

Kate: So, Luigi, how have you brought about a resurgence of cultural economics?

Luigi: If you come from a different country, you cannot fail to see how cultural explanations are important, especially in a country like Italy, where this culture goes back millennia and affects everything you do. 

For our listeners, the simplest form of culture that we can import into economics is simply a set of beliefs and values shared by a group and transmitted to the new members of the group via education or socialization. 

Whether this is true in a country, it is even more true in a company, where you can actually select people based on those values, and Netflix, Amazon, a lot of companies are spending a huge amount of time making sure that you fit with their culture and, of course, in motivating you with large rewards.

Kate: So, Mike, if we accept Luigi’s definition, how would you describe Uber’s culture in this context?

Mike Isaac: Oh, wow. One of my favorite things to talk about, not just in the lens of Uber, but in the way a lot of Silicon Valley companies operate, is this idea that the founders of companies should be sort of worshiped in a cult-like way, right? And a lot of that started with the Zuckerbergs and the Larry Pages of the Valley, right? And so, I think with Uber especially, Travis Kalanick, the main subject of the book or the founder of the company, is the main figure through which all the culture sort of stems from.

Luigi: If you have to distill what that culture was about, in the positive and the negative, what would be the essence of Uber’s culture?

Mike Isaac: I mean, that is again from Travis, it’s just sort of dominate and crush all competition, right?

Speaker 4: It has reportedly been cutthroat in its quest to expand, ordering rides anonymously, for instance, from archrival Lyft, only to cancel them. It employs contractors to lure drivers away from the competition.

Mike Isaac: It kind of didn’t matter what the secondary effects were after that, whether it was systematic sexual harassment of women inside of the company.

Speaker 5: A former engineer is going public with what she says is a frequent problem inside Uber, sexual harassment and sexism. She describes the company as an organization in chaos.

Mike Isaac: Some real dangerous sort of behavior in countries around the world. The leadership didn’t really pay attention to any of the bad behavior inside.

Speaker 6: What we see over and over again, when Uber gets in these PR messes, they never fire anyone responsible. Now, what message does that send if you’re at the company? I get rewarded for taking more risks that frequently involve putting women’s lives in danger.

Mike Isaac: And it was just sort of this idea that growth at all costs was the best, and that’s what they had to care about.

Kate: It sort of sounds like an ask for forgiveness, not permission, type of culture, but don’t even ask for forgiveness. Just look away if anyone comes close to catching you.

Mike Isaac: Well, that was the thing, the forgiveness was just sort of their valuation going up. Maybe we recklessly entered a bunch of new markets, but we’re also worth $20 billion now, or this next month, we’re worth $30 billion or whatever. Their proof was the business plan and the valuation continuing to go up for investors, and Travis didn’t feel like he had to apologize at all.

Luigi: To what extent is this lack of etiquette? To what extent is this doing business in a different way? We know that younger startups tend to be less formal in every dimension, but some of the stuff you say, like trying to crush competition at all costs, being ruthless, looking over the numbers, doesn’t seem so unique to Silicon Valley, certainly not unique to Uber? You are a technology reporter, so you can speak more broadly about other tech companies. Is this an Uber problem, or is it a general problem?

Mike Isaac: Well, this is the thing I debate with a lot of folks in the Valley, too. I think the main ethos is to destroy or at least uproot incumbents. And the idea of disruption for the sake of disruption or for finding a better way is generally celebrated, right? And so, I think the idea for a lot of founders is, you’re not going to disrupt incumbent companies without bending or maybe breaking the rules in a lot of ways. 

Some would argue that maybe Uber was sort of following the blueprint that a lot of these companies had already done. Airbnb is probably a prime example. It just sort of burst into real estate and home sharing without any sort of worry about a regulatory framework, and then they created one behind it. I think it’s more about being willing to push or break rules than other companies in other industries, and that the end often justifies the means, and usually that is in a rich IPO or a rich valuation.

Luigi: Let’s remind ourselves that Milton Friedman said that you should maximize shareholder value as long as you follow the rules of the game, which was, in particular, fair and open competition. And when I read Mike’s book, and when I see that there was a surveillance system to get around regulation, that doesn’t seem to me really respecting the Friedman rule, even though there is so much criticism about the Friedman rule, but they are past that and they’re even much worse than that.

Mike Isaac: You know what’s really funny, too, is that one of the main points that one of the biggest shareholders, Bill Gurley, who runs Benchmark, one of the things he said in the letters that they made public and in these lawsuits that they would go back and forth against with Travis is Friedman’s basic point, which is the fiduciary duty of us is to maximize shareholder value.

And that was their defense of removing the CEO at that point. And I don’t know. I think Travis would have probably argued . . . When we were reporting this stuff out and when it was happening in real time, their legal point was there’s no laws around this to begin with. There was no ride sharing framework. It didn’t have laws to ban it, therefore, what we’re doing was not illegal, which is an interesting interpretation of the law, but I think that was his pushback.

Luigi: The other point that I’m worried about is you correctly pointed out that Gurley was concerned about maximizing shareholder value, but he was not equally concerned about following the rules, and in fact, he probably said, “Oh, I didn't know what was going on inside Uber.” But at the end of the day there’s also a lot of willful ignorance, because he doesn’t know, he’s not responsible. Uber pays a fine. In the end, he is rich with his investment. 

So, what is the lesson you’re taking from this? Do more of it, right? It would be hard to take any other lesson from this than you break any law you can, and if you are successful, eventually things will patch up.

Mike Isaac: I mean, Travis is a billionaire multiple times over right now. He just sold a bunch of stock in the lockup expiration. He’s got a new company now that he’s working on, that’s, like, virtual kitchens, which is actually very interesting. You guys should look into that, but it's . . . And he’s not been ousted out of polite society in the Valley. He was at the Met Gala the other day. It’s just very much ... There is no real social cost to the way things have gone down.

Luigi: Because if you're a billionaire, but you cannot go to the Met Gala, that’s a problem.

Mike Isaac: That’s when you know you’ve gone too far.

Luigi: Speaking like a true New Yorker, not as a true Silicon Valley guy. As a true New Yorker.

Kate: You’re betraying your roots.

Mike Isaac: I totally agree with the idea that folks join companies and those companies sort of create those values and people fit into what works, but I also think one of the things that is kind of a revisionist form of history for a lot of these companies is creating what they think their values are supposed to be probably after they’ve gotten to scale.

One of the things that I think about in terms of Facebook or Airbnb, another Vice reporter uncovered this scam where dozens of their listings were total scam houses, and their CEO was basically saying, “Look, we’re going to vet every single house on the platform now. This is how we take this very seriously,” but the whole point of getting to scale is the idea that you’re not going to vet any of these things.

You just want as many listings on the platform as possible up front. I think people have to internalize that thinking from the beginning, from when you’re small, and then come back later and then create a more firm set of rules. I agree that the internal culture develops over time, but I also wonder if they just kind of try to rewrite their own history a lot of times, once they’ve gotten to a point of being the one in power.

Kate: Yeah, I think that’s a good point. That’s something I’ve wondered about a lot. Maybe that in the very early stages there’s actually a lot of uniformity across these startups and that it’s just sort of a regular place to work, and it’s only when they really start to explode and break onto the new scene that they try and rebrand themselves as what they think will be sexy.

Mike Isaac: Right.

Luigi: But we have to recognize also that the right culture for a startup is different than the right culture for a more established organization, that things need to change. The right culture for an innovative firm is different than the right culture for a nuclear plant, because in a nuclear plant, safety is number one. You don’t need to be very innovative, but you have to put safety number one.

Safety’s important everywhere, but if you run Netflix, it is less of a concern, and you can afford to make some mistakes. That’s what is difficult, is that you need to have a culture that is appropriate to your business and appropriate to the phase of development you are in.

And I think that that’s a big part of what is happening here, is that many of these firms start very informal with a lot of the natural mistakes that informality brings with it. And once they develop, they need to change. And if they don’t, and they don’t change fast enough, they are scolded, in a sense.

My reading of your book and the story of Uber is a company that did not change fast enough, because it grew so fast. It’s one of the fastest-growing companies, probably in the history of humankind, and it’s not surprising that they got caught a bit off guard.

Mike Isaac: I do think this scale of internet businesses, too. Fundamentally, a lot of these businesses are able to grow so much faster than probably many before, especially probably software businesses. Facebook grew to encompass two-and-a-half billion people in the span of the last 15 years, but most of its hyper-growth was much earlier than that. Uber, in particular, was interesting, because one of Travis Kalanick’s big things was that he never wanted to feel like a big company and actually resisted a lot of the probably normalized corporate processes that you would create once you get to scale.

When you have 15,000 employees, you probably need to create a functioning HR department so they can handle crazy complaints, and I think that’s probably a mistake of a CEO who is inexperienced or doesn’t want to accept what it means to become a big company. My favorite example now is just looking at WeWork and how that whole thing is playing out, too, because it’s like Uber on steroids, basically. But I agree. I think scale, and this is probably more dangerous for internet businesses that go through periods of hyper-growth really quickly.

Kate: There’s this whole shareholder versus stakeholder debate. You have equity holders who own the company and just kind of want to make money for the company at any expense. And then you’ve got the rest of the society. And so, as a manager, being aligned with shareholders, sometimes you can do best by everyone, for everyone, by actually creating new value and innovating and creating good products, maybe more efficiently than other competitors.

But then there’s also a billion different ways in which you can create value for your shareholders that aren’t good for society. For example, flouting regulations. For example, hurting workers or ignoring antitrust concerns. And I think that you touched on a lot of that in your book through a bunch of different anecdotes that highlight the point that there are good ways of making money and there are bad ways of making money. And I think that the corporate culture is important in all of this, because it helps send a message to your employees, “Here are the directions that we’re going to go in, in order to create value.”

And so, if you’re sending a message to everyone, like, just break things and don’t apologize, then that’ll have an impact in the sense that your employees will start moving in that direction of trying to flout regulation. Whereas if you create a different culture that’s just really, we really value PhDs and we really value big thinkers, and we want to give you a lot of freedom, so we’re going to create a happy environment and let you just do whatever you want, then that tells people that they might want to focus more on innovation and creativity.

Mike Isaac: I’m very curious as to what the Uber diaspora of folks who came up at Uber and had that mentality that you’re talking about and now go and leave, they’ve vested their shares, they’ve sold after the lockup that just occurred, and they go and start their own new things.

And there’s a number of little micro-VC funds that are popping up that are being led by these guys, and I’m curious what those companies look like and if they have similar value sets. Uber, of today, is trying to rebrand and say, one of their big cultural points from Dara Khosrowshahi is, we do the right thing, period. They’re basically cleaning up the baggage that came with Kalanick and everything in the past. But I think your point is right, what does that look like and how is that going to look over the next few years? I think there’s a real tension, too, like what some workers want versus how they were taught to act for the past 10 to 15 years.

Luigi: Don’t you think that the real problem here were the venture capitalists, because they are the adults in the room? Those are the people who bring the real money, that know how things get done, who basically hire the talented and brilliant CEO to get the startup off the ground, but they should be the ones that think about putting up the guardrails when this is necessary.

And here, and in general, at least from the literature, we know that traditionally, venture capitalists would ensure having enough control so that the CEO will not become too powerful, and here they fail big time. They fail at the beginning by giving too much control to Travis, but also, he accumulated extra control over time, and they were aiding and abetting up to the last moment.

Mike Isaac: No, that’s exactly right. The VCs were happy to let Travis amass as much power as he wanted, as long as the valuation went up and they weren’t making too many negative headlines. And then you really saw a sort of crisis internally among the board members, among some of the board members and among most of the LPs.

There’s a scene in my book where Bill Gurley was getting calls from his LPs every day saying, “Our investment’s going to go to zero. What are you doing about this?” And so, it’s hard to praise the board members and VCs too much when . . . It’s hard to imagine they were pearl-clutching later on in the game when they had allowed sort of this behavior to go on for years when it was under the radar.

And now what they would say is, “Look, we didn’t know the extent of how bad it was,” or there’s probably a level of rule-breaking or defiance that they have to live with, because that’s just what you invest in. That’s the type of people you invest in, but I don’t know. I’m thinking that mostly they were forced or compelled to intervene when the real danger was their investment being lost later in the end.

Kate: One thing that I found interesting was that, based on the reading of the academic literature in finance, there’s this idea that venture-capital firms and private-equity firms, when they come in, even at an early stage, they take a lot of control and they make a lot of decisions for the firm, especially in areas where they have expertise but the CEOs don't have expertise.

And I thought you characterized it in a slightly different way, which is that the VCs are pretty cautious about taking too much control, because they want to have access to the highest-growth startups, and they don’t want later CEOs and founders to get turned off by the amount of control that they took away from other CEOs.

And so, I wonder, how much of this is really just Uber? How much of it is the way that Silicon Valley corporate culture has changed over time? It was a little unclear to me.

Mike Isaac: Yeah, totally. I think this is really specific to tech in the past . . . probably around the Facebook, Google rise. And so, I would attribute it a lot to the Zuckerbergs and Pages of the world who did not want to go public. The whole point of going public was taking a lot of that out of their hands. They made popular, I wouldn’t say created, but made popular this share structure that over time, as sources of funding became more abundant in the Valley, and you could go to a zillion different family offices or VC firms or whatever, where everyone wanted to be seen as founder-friendly, one source put it to me, like you had to play the game that was on the field. And that game meant giving up more control to the founders over time.

And so, I don't think it’s necessarily that private-equity firms or VC should take immediate control of the reins, because there’s probably a number of examples where good companies have been totally screwed up by that once they come in.

And there are just as many founders who would argue that that’s the case. But in a spectrum of, let’s say, Zuckerberg before 2016 or 2017 was a positive version of complete founder control. And Travis is probably the negative version of that. I think there’s a whole lot of room in the middle to play around there. And so, I wanted to show the lengths to which this super-controlling founder can also be a negative influence, if that makes sense.

Luigi: You said that a lot of former founders were complaining about being kicked out by the venture capitalists. I’m sure that all of them complain, because all of them think that they were great, of course. But looking from a more, if you want, academic perspective, we know that companies need to change, and we know that some people are very good at changing, but they are rare. I think that it’s rare to find a case of a very good founder who’s also a very good manager of a mature company, like Jeff Bezos comes to mind. But they’re one in a million, probably.

And I think that there is a need, if you want to grow, to change the culture of the company, and with it changing the CEO. And in order for this to take place, you need to have the rules, the corporate governance in place. And I think that you described correctly that now the game has changed, that the entrepreneurs are these heroes that have all the bargaining power, and the venture capitalists are desperately trying to find what is the next new, new thing. And, as a result, they stop putting in place the rules of the game that allows them to change when things go out of hand.

And, in particular, the thing I’m very adamantly against are all these super voting powers that Travis had, that Facebook introduced, that Google introduced, that give a disproportionate amount of power to a very few individuals. And I think concentration of power is bad at every level. It is bad in the political realm, but it’s also bad in the economic realm, because people get crazy, especially when they get rich, and you need a mechanism to constrain this craziness, and the VCs of today, they’ve given up on that.

Mike Isaac: I thought Uber was going to be an apex of that. I guess it was probably a naive thought just because, again, let’s go back to WeWork. SoftBank has had to pay Adam Neumann a billion dollars to leave the company because he was so terrible of a CEO. That’s probably the worst—

Luigi: I want that, too, to get a billion for being terrible. That’s a pretty good reward system.

Mike Isaac: Destroying it, right? And I would imagine, or I guess I would hope, that that pendulum is going to swing the other way. But the other dynamic here, and this is specific to the Valley, but SoftBank is coming in with this Vision Fund with $100 billion and is investing crazy amounts of money to get into the startups out there.

If you’re a VC who wants to get into any round, and SoftBank is also putting $100 million or $1 billion into it, it just changes what the game is. A lot of the complaining I hear now is from VCs saying SoftBank is screwing this whole thing up for them. I don’t know what the power dynamic is going to be, but I think it’s going to be even further messed up because of the Vision Fund coming into the Valley.

Luigi: This art of always blaming the foreigners.

Kate: I think there’s also an interesting corollary to be made with a different side of the financing spectrum, which is on the debt side. When it comes to traditional bank lending, what we usually think about is that you have a bank that has a relationship with a firm, and when they want to lend to the firm, they put in these covenants into loan contracts that say, look, the CEOs and the equity holders can’t do certain things that will disenfranchise the creditors or allow the equity holders to run away with a ton of value.

But when you have fierce competition on the lending side and not that many investments to make, then you have this gradual erosion of the covenants and controls in place that allow the bank lenders to have any influence. And so now we’re in this period where people are saying it’s extremely covenant-light, that all the control is in the hands of the managers, and it sounds like this sort of dynamic is playing out kind of across the whole capital spectrum.

Luigi: You both seem to blame competition in the capital market for these things gone wild. I would like to blame lack of competition in the product market. Mike correctly said that the world changed since Facebook and Google took over, and those are the examples of two companies that became very successful by achieving a monopoly in their own segment of the market.

And there are a lot of negative things in that. Number one is that when the price is a monopoly, then you’re ready to do anything to reach that, because the alternative is to be nothing. It's not like, “Oh, I can be second or third place and still make good money.” It is whether I become a superstar multibillionaire or I basically crash my company. And when the choice is between these two things, I think more people are willing to do things that they’re not supposed to do.

The second is that to create this critical mass of customers, then you do need a bit of this personality cult of the CEO. And then it’s very hard to get rid of him or her, most of the time it’s him, because he was crucial to the creation of this big mass. In trying to pursue these lottery tickets, these are basically lottery tickets to hold a monopoly. And in order to pursue that, the capital market is buying anything. If you buy lottery tickets, you aren’t particularly careful in which one you buy, because you can’t tell the difference. And it seems that that’s what VCs are doing this day.

Mike Isaac: I mean, that’s definitely an investment strategy. I think that people make fun of VCs like they just go and have a very luxurious life, but I think it’s actually pretty hard to be a good VC. A lot of the time the investment strategy is kind of just spreading the money pretty evenly, and most of your investments are going to fail. The whole name of the game is your one grand slam makes up for every one of your big misses or whatever.

The other sort of funny dynamic that is, again, post-Facebook and Google is that now companies are being created just to flip to Facebook and Google. Because the game is sort of already lost . . . If you’re trying to operate in a digital advertising world, that’s gone, right?

You can’t compete against . . . and I work for a newspaper, which has basically ceded that market to Facebook and Google. A lot of these companies, their entire business plan is, well, if we’re an ad tech startup, we’re definitely going to probably get bought by one of these two companies. Or, if we’re some consumer product that can tell a plausible-sounding monetization story, we don’t really need to worry about it, because Facebook or Google will probably buy us even if we fail or whatever.

Those are the other sort of things that regulators are looking at right now. I mean, if those aren’t signs of a total monopoly on consumer internet products or at least ad-supported products, then I don’t really know what is.

Kate: OK. This has all gotten pretty depressing. Mike, do you think that there are any good examples of positive corporate culture that’s going . . . where CEOs are going out of their way to make positive changes?

Mike Isaac: So, I’ve been thinking about this a lot, because I don’t like always ending on a down note. And one of the positive things that I’ve been doing on this book tour is talking to a bunch of young startup people, basically a lot of young founders and entrepreneurs who want to build the next company.

First of all, there’s a bunch of whiplash around tech going from great to awful, very quickly in a very short amount of time. So, they’re all confused, but they also harbor some feelings of resentment or disgust around certain companies. If you work at Facebook, it’s not as cool as it was a few years ago. Or maybe young technologists think that’s like—

Luigi: You hide at a cocktail party.

Mike Isaac: Right, exactly. That’s exactly it. You don’t want to put your Facebook shirt on at the cocktail party. That’s exactly it. And so, when I go to these channels—

Luigi: Which is not like hiding from the gala.

Mike Isaac: Slightly lower stakes, oh my God. But they’re asking questions like, “How do I create a good culture? How do I create a company? I want the company that I make to not treat women like objects or very poorly from the very beginning or at every level.” Or, “How do I make sure that we act ethically?” or, “How do I have our ranks represent the kind of company and the kind of products that we want to build early on?”

I think there’s hope in that, in that they’re thinking about these things now, especially because it’s come to such a crescendo in the press and in the way we think about tech companies now. And the other thing I would point out is that there’s a real sort of rise in tech workers to recognize that they have collective power. Unions have been a thing for a very long time, but now these sort of quasi-unions are starting to be created inside of these companies and they’re recognizing that the CEOs have to answer to us in some ways. Not in every way, but they’re pushing back a little bit more in ways that I’d never seen before.

Luigi: At Harvard Business School they created a pledge for students to pledge how they will behave in the future. Maybe Silicon Valley should create a pledge that entrepreneurs choose whether to pledge or not of, I follow the rules, I don’t try to kill my competitors, I do X, Y, and Z. And VCs, if they are serious VCs and they are concerned about their impact, only finance the one who make the pledge. And if you violate that pledge, then you are expelled from the community. I think that that is a private solution to this problem. Since you are a journalist, you should launch this initiative in Silicon Valley.

Mike Isaac: Gosh, I would be very curious who would be excited to sign this and who would not be excited to sign this. But it would be funny. And I do think there’s an informal way of looking at companies now to see who’s above board and who's not.

And it’s interesting to see which investors won’t . . . like, not everyone invested in Juul out in San Francisco. They were still seen as a vice company, and you’ll pay a social tax if you invest in that. So, some of the blue-chip firms would not invest in that, even though the valuation had skyrocketed. I don’t know if there’s ever going to be a formal pledge, but there’s certainly some maybe unspoken code right now that everyone is kind of grappling with.

Kate: I don’t know, Luigi, for someone who’s often very cynical about how markets work, I feel like a pledge just seems like a little bit fanciful of a solution.

Luigi: So, now you are the negative. I’m trying to be positive and to have an effective way to change things. I think a pledge that might actually help VCs discriminate is useful. I think it is worth trying.

Kate: Then it’s not so much the pledge as much as VCs or maybe the government’s willingness to sanction companies that act poorly. You don’t need a pledge to do that. I mean, we already have plenty of examples of companies acting poorly and no sanctioning, no repercussions. 

So, Mike, what we often do on the show to wrap things up is to figure out whether the topic was a capital-is or a capitalisn’t, to tie things to our name. Just in general, Silicon Valley culture, do you think that's a capital-is or a capitalisn’t?

Mike Isaac: Oh, man, I’m going to guess it’s probably a capitalisn’t. Yeah, that would be my experience so far.

Luigi: So, what about you, Kate? Do you agree?

Kate: Look, I have sort of a different answer, which maybe could launch a whole new discussion, and this is also a somewhat unpopular opinion, but I just look around me, and I don't think a lot has changed in the past 10 years.

If I just even look around my apartment, I'm in New York right now, and walking around the streets. My laptop is the same laptop that was there 10 years ago. The phone is basically just a tiny bit bigger than the phone that was there 10 years ago. Google Maps existed 10 years ago. All this stuff that I use has been around for the past decade.

And so, if this whole—

Luigi: Not Uber.

Kate: Yeah, Uber is a big change, and I agree that there are some improvements that have been made along the margin. But to me, that was a disruption of local rules and regulations rather than really a new technological innovation.

And so, in terms of whether or not Silicon Valley culture is really bringing about huge improvements to everyday living, I think the answer is kind of no. And so, to then compare that to these horror stories that you hear about discrimination and harassment and the cutthroat work environment, it just doesn’t seem to me like it could possibly be a capital-is.

What about you, Luigi? What are your thoughts?

Luigi: I think that clearly some of the aspects we analyzed today are capitalisn’t, but I think that there is a more positive culture. I think that what I read about Netflix or Amazon in this respect seems to me a positive innovation culture that brings disruption, that is not very coddling, but it does contribute to improving productivity and the economy in general. So, I would not like to throw everything away with the bathwater.