How Political Should an Entrepreneur Be?
European Straits #80
Dear all,
A mounting conversation within tech circles surrounds the extent to which entrepreneurs and venture capitalists should dabble in politics. London-based VC Fred Destin recently wrote that his Twitter followers were angry at him tweeting about politics. Azeem Azhar, who curates Exponential View, also mentioned his readers being surprised by him “discussing so many issues about the political economy, rather than pure-play technology”.
Conventional business wisdom holds that one shouldn't mix politics with business. Yet that refusal to engage can at times directly threaten business itself. It's fair to say that if the likes of Travis Kalanick, Mark Zuckerberg and Brian Chesky had been more willing to engage in politics, their respective companies could have avoided some of their recent regulatory and political problems.
For us at The Family, politics has been a core business function from Day One. That’s because in contrast to the typical Silicon Valley attitude, we in Europe don’t have the luxury of insulating ourselves from potentially destructive interference from the world of policy. And so the rule has always been, “If you can’t ignore them, engage with them.” As an investment firm, we believe our portfolio companies have a direct interest in our ability to shape the conversation around technology and entrepreneurship.
As regular readers know, that’s the same attitude that underlies my new book Hedge: A Greater Safety Net for the Entrepreneurial Age. The idea that entrepreneurs should allocate time to reflecting on the future of the Safety Net may appear strange to many in the tech world. Yet today it has become critical if we want entrepreneurs to succeed. And as startups enter more heavily regulated markets, it’s becoming the case in the US as well. (This, by the way, is why Hedge is targeted at a US audience 🇺🇸)
All that being said, the idea of entrepreneurs foraying into politics should be applied with caution. In the past, examples of businesspersons entering the political field have ended in disaster. George W. Bush, despite being from a respected political lineage, presented himself as a corporate CEO determined to fix America—and now his presidency is ranked among one of the worst in US history. More recently, Donald Trump also campaigned for president touting his business experience, and already it seems quite clear that he will be in the running to take over the ranking of worst US president ever. Convincing cases such as Michael Bloomberg’s seem to be the exception rather than the norm.
Beyond specific business-to-politics transitions, the key is that entrepreneurial involvement in politics very much depends on where we are in the techno-economic cycle. Our idea about businesspersons staying far away from elections and policymaking dates back to a time when the business world had obtained everything it needed from politics. But every 50 to 70 years, the economy undergoes a massive shift which Carlota Perez calls a “technological revolution”. In such a time, the institutions that we inherit from the past become obsolete, and so there’s a rush from businesspersons to get closer to the world of politics. Mostly this takes the form of demanding more corporatist and protectionist measures from the government. When established firms become less competitive, it helps to erect regulatory barriers to make it harder for foreign competitors or new domestic entrants to contest their positions.
The primary reaction to that seems to be that tech entrepreneurs also need to learn the lobbying game. And this is what we’ve been witnessing with tech CEOs making friends with politicians, venture capital firm Andreessen-Horowitz launching a in-house lobbying practice, and embattled tech companies hiring political veterans such as Uber’s David Plouffe or Airbnb’s Chris Lehane.
The problem is that in transitioning times, lobbying the government is not enough. That’s because policy, too, is undergoing a paradigm shift. In ordinary times, it is best left to politicians and civil servants. But the current revolution has rendered most policy tools and methods obsolete. As a result, government officials are often unable to do anything except reward struggling incumbents with regressive, corporatist measures that make life harder for entrepreneurs.
And so this is what entrepreneurs should have in mind when it comes to foraying into politics:
We’ve heard too many tech entrepreneurs advocating for pragmatic problem solving and centrist “common sense”. I don’t think this position is particularly useful. For one, it’s boring and uninspiring. If you think that people are still interested in moderation and pragmatism when they elect people like Trump, you’re gravely mistaken about what politics is about today. Above all, I’m convinced that during technological revolutions there is no such thing as “common sense”. Rather there’s the new guard and the old guard who are pitted in a battle to the death. And so entrepreneurs shouldn’t enter the political field as boring, technocratic problem solvers. Rather, they should enter it in the tradition of Saul Alinksy—as radical organizers.
One of the key goals of entrepreneurs should be to upgrade policymaking. In Hedge, I devote an entire chapter to what I dub “The Lost Art of State Intervention”, arguing that we can’t rely on those who claim to be experts in policymaking, because that entire field needs to be reinvented, too. And this is another role that entrepreneurs have to play: not only lobbying for their companies, but also inspiring new ways for the government to intervene in the economy. This is what organizations such as Code for America are doing when it comes to reinventing delivery of public services. It’s also what Jeff Bezos seems to be aiming at by tackling the challenge of alongside Berkshire Hathaway and JPMorgan.
As it’s summer, and we all supposedly have time to read, here are a few more readings on entrepreneurship and politics:
Valley Politics: The Democratic Party’s Love Story With Entrepreneurs (my wife Laetitia Vitaud & me, The Family Papers, November 2015—on what the world would be like if Hillary had won)
The Refragmentation (Paul Graham, January 2016—one of the most inspiring political texts by a venture capitalist)
Entrepreneurship Is the New Politics (me, The Family Papers, January 2016)
A lot of people don't have much experience with real estate developers (Thomas H. Crowne, June 2016—on what Trump’s real estate experience means for his politics)
Uber Just Put Every Tech Company In Danger (my colleague Kyle Hall, February 2017—about how individuals can pressure tech companies so as to obtain things from the government)
The CEOs Won’t Save Us (David Dayen, The New Republic, August 2017)
Brexit, Trump and a generation of incompetents (Simon Kuper, The Financial Times, December 2017–on the importance of a formative experience for political leaders)
Can Big Tech Be Tamed? (Gary Kamiya, Modern Luxury, March 2018—making the convincing case that tech companies should work with the government on building new institutions)
If you’re interested in both entrepreneurship and politics, it’s still time to get your copy of Hedge and spread the word! Simply follow the relevant link, depending on where you are: 🇺🇸US, 🇬🇧UK, 🇫🇷FR, 🇩🇪DE, 🇮🇹IT, 🇪🇸ES.
Warm regards (from Normandy, France),
Nicolas