Big Technology Podcast - Venture Capital's FTX Mistake, Elon's Twitter Plan, Investing in Labor Tech— With Roy Bahat

Episode Date: November 16, 2022

Roy Bahat is the head of Bloomberg Beta, a venture capital firm that invests in companies building the future of work. Bahat joins Big Technology Podcast to explain why he — a VC — is investing in labor-organizing technology. We spend the first half speaking about how VCs trusted FTX, where the economy goes from here, and whether Elon Musk's plan for Twitter can work. Join us for a fun, lively discussion that takes some unexpected twists and turns.

LinkedIn Presents. Welcome to Big Technology Podcast, a show for cool-headed, nuanced conversation, of the tech world and beyond. Our guest today is Roy Bahad. He is the head of Bloomberg Beta, an early-stage firm that invests in companies working on the future of work. And Roy is actually one of the early guests on Big Technology Podcasts. If you're a recent listeners, you can go back and check out our episodes. Thank you, Roy, for helping us kick this thing off the ground. And it's great to have you here today. Thank you.

I feel like you're the one hosting good conversations. So you're the one helping the ecosystem. I get to show up and talk with people I like and respect. Awesome. Well, I'm stoked to speak with you today in the origination. So the reason why it seemed like it was a great time to have you back on is because you and I were speaking a little bit ago, maybe a few months ago, and you had mentioned that you had seen enough opportunity in labor organizing, that there was growth in labor organizing

and needs in labor organizing, that the labor movement in the U.S. and potentially worldwide was growing to the point where now there was a real opportunity when it came to investing in a technology that empowers that type of organizing. So I definitely want to spend most of today talking about that opportunity where the software is going to be that's going to enable this. And then the impact of labor unions being able to use that technology and whether they should, whether, you know, what the benefit is in terms of, you know, for workers, for management, we'll question all of that. First, though, I think we really should get to the news because there's, there's been so much news breaking in terms of the tech world. Just last week, we're recording this on a

Friday. The episode goes live Wednesday, but, you know, we've seen that meta laid off 11,000 people. Salesforce is going to engage in layoffs. Amazon is doing cost cutting. Twitter, of course, this rollicking mess under Elon Musk and an FTX, one of the biggest crypto exchanges, is basically gone kaput overnight. So if it's okay with you, why don't we touch on some of these news stories and then we get into the labor stuff. Yeah, my only worry is that by Wednesday, you know, will any of this even still be there for us to talk about?

Yeah, so apologies to listeners. If the world is no longer standing and we... If the time machine has done done things. poorly by us. Right. But I think there are some things that will hold, including this FTX story, which will definitely have cascading effects. It's filed for bankruptcy. Right. You're an investor. How do invest? I mean, Sequoia had this big investment in FTX. They wrote this falling long profile of Sam Bankman Fried, who was the founder and CEO on their website. How do investors get something like this so wrong? What needs to go wrong inside a VC firm in order to

support such a disastrous outcome, which evaporated $32 billion overnight. Yeah, I'm going to do my caveat first. My caveat first is none of us can know what they knew or didn't know what they were told or weren't told. We only say what folks are shared in public. And, you know, these are firms with long track records of really good decision making, you know, and so on average. And in the venture world, on average, a weird thing is, you know, I like to say, it's not

the kind of world where your batting average needs to be good or even your slugging percentage. It's only about the tape measure distance of your longest home run, meaning if there's a chance the thing could grow by orders of magnitude, that can excuse a lot of failure. Now, at the same time, that means that sometimes you make big honking mistakes. What might have happened in this case? I'll give you scenarios. I don't know, and I don't want to speak to the specific firms because I really don't know the details, but I'll just say, number one, there could have been fraud. We just don't no, right? There might have been material misrepresentations of actual numbers. The second thing is that interdependencies between the various entities that they were looking at investing in

were just outside of view and so they didn't consider them. In a typical, I mean, I tweeted the other day, you know, this is where VC's learned the difference in the income statement and a balance sheet. And in part, you know, I noted Sequoia said, well, you know, they had net income of X. the year before. And it's like, yeah, you can be making money and still obviously be subject to a blowup, especially if you're in a business like a financial technology business where you have a ton of assets that are there to provide some safety cushion. But if they're not safe, then all of a sudden customers start withdrawing. It doesn't matter how much profit you made last year. You're out of cash. Yeah. I mean, a Ponzi scheme's income statement looks pretty damn good until the withdrawals come in.

That's right. And I don't, I have to admit, I don't fully follow. the math of how this in particular could have been a Ponzi scheme. It looks much more like what coin desk kind of originally reported, but I'm not a deep expert. I don't know. But that's the way it could have been missed. And to be fair, traditionally in the soft, so I see this as a function of a couple things. One thing is it's a function of tech, big tech to, you know, podcast name, notwithstanding, entering into new industries other than pure software provision. And because in a software business, this kind of stuff is easy. Software companies, to make a software company go bankrupt is actually very, very difficult because you don't really need to borrow money. Usually raise it through equity

capital. You can make it, by the way, it can go to zero. But to have this kind of bankruptcy that's driven by having levered up assets, basically doesn't happen. But as tech enters financial services, real estate, and other industries that have different kinds of capital requirements and complexity. There's all this stuff that we're just not in the habit of doing that we now have to learn. Yeah. Are your VC group techs now saying, oh, maybe we shouldn't have gone all in on crypto or people a little bit more wary of investing in crypto? No, I don't think anybody's really saying that. First of all, because I don't know how many people really went all in on crypto. I mean, obviously, all the folks who went all in professionally on crypto, like, you know,

they have, they had and have long-term views. You know, they knew crashes would come. I don't know. Noah Smith was speculating that maybe this is more than just a crash of FTX that unwinds all a crypto. I have no idea. That may be the case. I, you know, I should acknowledge I continue to hold Bitcoin and Eath. It is astonishing, though, how many of these firms end up in the death spiral mode. I mean, them, Teriluna, three-hour capital. Yes. And so here's the other thing I'd say is, again, not as a deep expert. It strikes me as an incredible testament to the the success of U.S. regulation. Right.

Because Coinbase so far seems to be fine. FTX U.S. seems to be fine. And it's like, yeah, if you do all these things that were disallowed in the financial industry in the U.S. a long time ago, like combine an exchange model with holding customer assets, guess what? Things could go boom. Yeah, exactly. So speaking of things going boom, there's also been this interesting moment where so many

tech companies have, and I'm going to, we have Ryan P. Peterson from Flexport CEO, founder of Flexport coming on next week. I'm going to go into this with him in depth. So listeners, if you're interested, come in. I'm biased because we were the first. Are you guys in there? I think to say yes, we wanted to invest. Oh, no, we're not just in there.

We are in there. Yeah. So one of the interesting things that we're seeing is that so many founders and CEOs have expected the conditions in the pandemic to last forever. And that was something that was particularly caught my eye with Mark Zuckerberg's letter to employees after he laid off. 11,000 that he said, I thought these conditions would continue forever. And they didn't. And you're seeing, you know, not only in the layoffs, and there are, there are plenty of layoffs, like I mentioned

at the top, but also companies operating strategy, the way that they report to Wall Street, the way that they're viewed on Wall Street. Why do you think, so let's, I feel like you're really good at the macro take. So on the macro take, why did so many firms, and I'm curious if this apply to some of the startups that you're working with, take this belief that the conditions inside COVID would persist forever because we were eventually going to go back, you know, and start living outside of the digital world. Well, first of all, I don't know that what's happened is going back. You know, we're in this environment that did not exist before COVID either, of high

inflation and all kinds of other stuff that feels fresh and new. It's definitely not what happened during COVID, but it's also not a return to what came before. One of the tragedies of companies is that the decision, the risk that may make sense for a company to take may be catastrophic for its employees. So, for example, if I'm sitting there thinking, well, well, things like this, I'm sitting there in the height of some benefit to my company during COVID. And I'm thinking, our condition is going to persist. Of course, nobody ever knows 100%. everything is about judging risks and odds. But if there's a good chance it might persist,

well, then I want to keep fighting to grow and hire as many people as I can and dot, dot, dot. And so, you know, getting it wrong, it might have been the rational decision at the time. And this correction might be rational. Like, that's not necessarily a sign of a huge error other than the fact that it really harms employees, which is tragic and catastrophic. for many, many people. And I used to have a more sanguine attitude about layoffs in tech, like, you know, even the 2008, 2009, you know, which I also lived through, it's like, well, you know, people in tech get laid off, but the vast majority of them end up in good jobs reasonably soon after.

This is now at a scale where I'm not sure if that's the case. And so I think this could feel a lot more like layoffs in the auto industry. Roy, you got me thinking about another thing I'm working on, which is, how bad this could get. You know, I wonder if we're, you know, seeing all these layoffs, you know, there's one view that this is the end, just the necessary cuts that need to modulate back to where people, you know, companies need to be. And then there's another end that like, what it sort of feels like, you know, to me

sometimes, which is that we're kind of in the roller coaster on the way over that first drop and things are really about to whoosh down, downward. What's your view on it? I don't do predictions. Ironically, given my occupation, if I pretend to... But you have to have some sort of hunch in terms of... Yeah, no, no. Not exactly.

I don't have to have a hunch. What I have to have is a belief about the distribution of what might happen and prepare myself for various scenarios. No, I will. And I'll just say, you know, a couple things I'm informed on by this. One, in a very narrow sense is our business partner at Bloomberg Beta, Karen Klein, was, you know, set up the first soft bank fund in the U.S., had to unwind a bunch of documents. dot com one disasters like she was involved in shutting down web van and so she's always like listen things could fall apart at any moment behave as if the wheels could fall apart at any time and i was

always in part as i learned from her this like little mini doomsdayer who founders would be like well i'm going to blah blah blah blah blah and i'd be like okay but you know the world could fall apart tomorrow and when covid happened i was like i didn't want to be that right but okay um so first of all I believe that second, just a matter of personal stuff, a matter of personal perspective is, you know, I'm the grandson of Holocaust escapees. I know from family lore how bad the world can get. And so I always think, well, you know, what is the full range of possibilities here? And so do I think it could get much worse? Absolutely it could. If you believed it was going to, would you take actions any differently? You know, most of the time, we're advising startups

raise as much as you can, on fair terms from people you trust, spend as little as you need to de-risk the next thing and then grow as rapidly as you can. And the companies that have upside-down unit economics, we are very rarely involved in that kind of company because we're really careful about that can always happen. The companies that are borrowing a lot to push their growth at the risk of imploding, we're very rarely involved in part because we don't invest in financial services

and some other domains that tend to be risky on that. So I just kind of believe in constantly having a stance of preparation for the unpredictable, even though it's a lot less fun than somebody saying to you, Alex, I know exactly what's going to happen. Here's why. And then a month later, if they were right, they retweet themselves. Yeah, that sounds like half of Twitter. So. Yeah.

Yeah. Well, half of the Twitter that was. By the way, I've been thinking about, like, you know, what dinner party would you want to go to with people living or dead? The Shabbat dinner. Or whatever it would be with Elon and SBF talking to each other about their last week, that would be a fascinating conversation. I saw this AI thing between Slavo Gijek, I don't know if pronounce his name exactly,

and Werner Herzog, I think, like an imagined infinite conversation between them. I'll take the imagined Elon SBF infinite conversation right now. Well, it really would have been. So SBF, I think, through an intermediary, did reach out to Elon about investing in Twitter. Those texts hit the airwaves. Right. And Elon's response was like, does he have tons of money? And he did. But I don't think he ended up making the investment. But that would have been, that would have been wild if he was involved in this as well. Somehow that seems like it would have been poetic. But should we do maybe, I know we're doing like a mini podcast in a podcast, but this is fun. Let's roll with it. Should we do a couple minutes on what's happening on Twitter? Sure. What do you believe? I wanted to ask you, what is, you know, so you are as an investor and optimist.

Yeah. What is the most optimistic take about what Elon is doing at Twitter right now? What would you say is the case that he's actually doing a good job? That is a beautiful question. And while I am not in the fanboy of everything he says camp, he does say some things sometimes that really land. And somebody asked him as an optimist or a pessimist. And he said this thing about like optimism, pessimism, I don't think about it.

I just get it done. Something like that. And I kind of am somewhat the same way. But I do think there's a case. So I will, the case that he's doing the right thing, for sure, Twitter was wildly overstaffed. Yes. And the costs needed to be cut. For sure, it lacked any product energy.

And right now, say what you will, it's got product energy. It may be frenetic Tasmanian devil type energy, but it's got energy. And so the best case is that they discover some interaction. that makes Twitter feel more rewarding for many more people and that they do not ruin the ability of Twitter to have whatever detente it often had with bad actors. Maybe they even make that better because Twitter was a, you know, an awful place in many ways before for misinformation and, and particularly for people, I mean, look, here we are two white guys talking to each other. We have the easiest time of anybody on Twitter, but, you know, particularly for people from

underrepresented groups, and that one of those techniques allows them to make enough money that it ends up being a going concern. I could care less what happens financially to the company. You know, I'm, you know, we have no interest in it financially in any way, shape, or form. But as a user and as a citizen of the world, I care a lot about what. happens to it. So I think that's the best case is that they basically Tasmanian devil energy and they hit something wild that ends up working. And Elon keeps saying that the user numbers are hitting all-time highs and he's released the charts. This is like a once, I mean, never seen before a growth curve that Twitter's had. Yeah, I'm hesitant to call it a curve because that sort

of implies, even that word applies long-term trajectory. And I mean, look, rubbernecking at a car crash produces a lot of vehicles on the road too. So it's just so hard to say. And I think I've tried, you know, one of the hard things about anybody visible and Elon as, you know, one of the most, if not the most visible people in certainly our neck of the woods, this happens is people tend to array themselves in looking at it along whatever tribal lines they find themselves. If you are team hustle porn, team, you know, white man, genius brain, then you look at Elon and you're like, everything he does is brilliant. this is crazy. Of course, we need people sleeping on the floor in the office. And if your team power is too concentrated, then everything he does is terrible. And so I'm trying to be in a place where I look at it with open eyes. And I would say he, if Twitter can be destroyed through shaky

action, he's certainly testing that hypothesis. Certainly Twitter seems to be robust enough to withstand that so far, but we shall see. Yeah, this verification thing is an absolute disaster. You can't tell who's real, who's fake. I have really enjoyed the people who show up in the mansions. Totally. And are calling me an idiot and, you know, this militant defense of Elon and they don't have the blue check. And I just respond. Okay.

Pay $8. Now pay $8. That's great. Yeah, I mean, it is a bit of a disaster. It is a disaster in terms of what's happening. And also, who knows where it's going to ultimately end up a few days of disaster. I don't know. But what I'm really worried about is,

whether it becomes a more hospitable place for the awful. And I think, you know, one of the guys who's been engaging with Elon, I've just been watching in part because he's a founder who we backed is Amjad Masad, you know, engaging with him on Twitter. I don't know anything beyond that. Who Amjad had this theory that if users could pick their own algorithms, they would make better choices for themselves and have a better experience. That may be true.

I think one of the questions of the moment is under what, circumstances, do people left to their own devices choose hate? And when do they choose something constructive? And Elon is going to give us a lot of data to test that case. I just don't know. Yeah, it's going to be, it'll be interesting. I think this point that you made if we don't know at this point is so important. And we always want to have nuanced conversations on this podcast as part of the tagline. And I've been astounded to see all these stories saying that Twitter is dead. Anything that's done in a day can be reversed in a day. And, you know, this is, well, not maybe not completely. Well, you can reverse the product choice. What you can't do is reverse the

community. That's sort of to me like saying everybody's at the party, they're having a good time. You flip the lights on and it kills the buzz. You can flip the lights back off, but I won't restore the buzz necessarily. But still, we don't know. And, you know, my team is make America nuanced again. And we'll just see. It's a nice hat. Yeah, right? I'm trying to observe this as openly-mindedly as possible. It is so difficult. I'm definitely afraid and at the same time, you know, my fingers are crossed so hard they might break. Yeah. Well, I definitely want to leave, you know, at least this entire second half to the labor conversation. Let's talk about it. Because I do think one of the things, somebody tweeted and

deleted some guy at Twitter. I can't remember like, hey, man, we should form a union. And then he took it away. And I do wonder if the Twitter employees had been organized, if their power as a constituency might have been, well, I think it certainly would have affected this all differently. For the better, for the worst, that I can't quite say. But, you know, it's an example of why there's so much potential in labor organizing. Yeah. So we'll talk about that and more after the break. We'll be back here in just a minute with Roy Bahat, the head of Bloomberg beta. Hey, everyone. Let me tell you about the Hustle Daily Show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than two million

professionals read The Hustle's daily email for its irreverent and informative takes on business and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less and explain why you should care about them. So, search for The Hustle Daily Show and your favorite podcast app, like the one you're using right now. And we're back on the big technology podcast for the second half. about labor technology, worker organizing. Roy Bahad's with us.

He's the head of Bloomberg Beta, early stage venture fund that invests in the future of work. Roy, I wanted to start here with a big question, which is, what is the historic moment and the historic context that the current labor movement finds itself in? Because just to set it up, we had the New Deal, of course, granted labor rights, very big, powerful labor movement in the 70s in the U.S. And then just a true diminishment after that. And to be frank, it, you know, many of the labor movements or labor unions have been corrupt, have, you know, wielded their political influence in extremely, I would say,

gross ways. I've seen it in my, you know, in my previous career when I, you know, spent a couple minutes in New York City politics, how nasty it was. And many of them have lost legitimacy. However, we do see this movement now, places like Starbucks, places like Amazon, Apple. Places like Apple are starting to see some organizing. And those are the big names. It's hard to tell exactly where we are overall.

So how would you answer that question? A caveat to start with again, which is, I don't speak for the labor movement. I speak for myself as an observer of the business world and an ally to trying to make the business, the economy work for everybody. Yeah, it's a good caveat. It's kind of fascinating. I mean, here having, you know, you typically have capital against labor and you're a venture capitalist who I think is fairly pro-labor, so. Yeah, and it's been complicated.

I mean, I definitely have people in the business world who are like, what are you doing? And people in the labor world were like, who are you? And so I'm just going to try to speak for myself. And I'll say, I'm really, I have this in the brain because of our last conversation before the break about Twitter, where I was like, if you want to really hear mansplaining, go in your college roommates text chat on signal. about what's happening with Twitter, and everybody can explain to you what's going on. And so I don't want to be that guy about things I don't know about. And so I'll speak from my own experience, which is I encountered labor unions early in my career, but only in a very limited way.

Like I ran a nonprofit a long, long time ago, and some of our employees were unionized. And, you know, I didn't really think very much of it. It didn't have that much of a daily effect. We would do things like organize a demonstration. and tons of people would show up. And I'm like, where did these people come from? They're like, oh, they're with the union. And I'm like, wow, like that's something.

But I really didn't think about it much. To be honest, I thought about it. This is a sad admission on my part. I thought about it. I think the way many people in the business world do and many people who go through, you know, higher education in the U.S., I thought of it kind of like the library in the sense that it's an important institution whose time in its past form had passed,

and therefore you just didn't pay much attention to it. That's not fair about the library either, but that's how I thought about it. And you cited the numbers, which is steady decline in the private sector for sure over a long period of time. And I think what happened in the U.S. was labor movement became synonymous with union. And there are obviously many forms of labor organization that are not unions. And I'll tell you when the light bulbs in my head started going off. The first thing is we've been focused on the future of work since we started our fund 10 years ago. And people would often, we were also the first, we were first firm to focus on the future of work.

We were the first firm to focus on AI over my objection at the time. I was obviously dead wrong. And we became involved in these conversations about like, would the robots take away all the jobs and what would happen? And we did this year-long study with New America on what would the effect of technology be on work. And this is a few years ago. And the thing I realized is despite all the conversation about it, the future of work, almost every problem we have with the future of work already exists today. People already don't have a fair shot today. People already, like the typical person in America

who works hard and plays by the rules does not have a reasonable shot of providing a good life for themselves and their family. And so I started to see that as a powerful source of what. And I'll use an economic word, which is the word demand. And I was like, well, what are workers going to do in this? And in the middle of that study with New America, which was called the shift Commission, in which we had wonderful participants. I mean, Andy Stern, who had run SCIU and wrote a book about raising the floor for workers. I got to know him around some guaranteed income advocacy that, you know, folks like YC were involved with back then. He was saying unions the way we've done it is not the answer. And I was like, huh, maybe this needs a reinvention. And I just kind of had that question

in my head. And in the middle of the shift commission, Trump gets elected. And I was like, okay, one way to look at this is working people wanted a fair chance and they didn't, couldn't figure out how to get one. And many of them fell into the kind of racist, hateful answer that Trump gave them. So that happened. But it obviously didn't work. And also break the system. That's right. That's right. Just frustration presents that. And it's like, look, if I was playing a game, I couldn't win. That was my whole life. I'd flip the table over too. And we had George Floyd and we had, I mean, you know, obviously the history of racism in the U.S. We had all this stuff happening, you know, COVID, revealing what essential workers were going through.

So that pressure just kept cooking and I kept wondering, what are working people going to do about this? And because voting for an extremist didn't work, riding on the streets didn't work and or, I mean, it worked in some fashion, but it didn't solve the problem. And that's when I began to wonder, are they going to turn to organizing? in new ways. And at the same time, what I saw happening in the tech industry was Project Maven, the Amazon women organizing on climate change, Project Maven was when a bunch of Google employees got Google to stop selling AI, a certain kind of AI to the government. It's like, oh my gosh, relatively modest numbers of employees when they work together or working people, people who work for a company, when they work together, can change what these monarchic

tech, you know, giants want to do. I was like, there is, real power here. And then the last piece to me is during the 2020 election in the middle of COVID, obviously, my family, my wife's from Wisconsin, we decided to move to Wisconsin and temporarily during the election. We voted and organized there. We still spent a lot of time there, but we were there for long enough to vote and be part of the community. And what I saw was how bad the political infrastructure is in the U.S. in actually engaging people politically. I'd never lived in a swing state during an election. But wow, I just saw, like, what is get out the vote? It's like a bunch of digital banner ads, which fine if they convert. And then like a stranger knocking on your door

being like, hey, this thing that you might do once every four years, it's not like if you do it individually, if we all do it, it matters. If you do it, I don't know. It's kind of like going to the DMV, please vote. And it's like, well, of course people don't really vote. And then I started wondering what might make people more politically engaged. And there's this political science researcher who I got to learn from a little bit in college. She's a role model of mine named Harry Hahn, and she has this line, she's a professor at Hopkins, she has this line, democracy is a muscle. And what she means by that is, when you practice it, you get more of it.

And so then I started seeing like, wow, we have this economic force that's going to happen. It might have political consequences. And basically then I did have a hunch, which is the hunch I had, or at least the possibility I began to entertain. This is now two plus years ago, is what if we immediately have a lot more labor. organizing in the U.S. because workers want to be treated fairly, and this is the best way they can get it. And then Starbucks happens, Amazon happens, Apple happens. And so now the way I see it is we are inevitably is maybe a slightly too strong word, but I believe we are very likely to have

much more labor organizing in the U.S. because it's a way that workers can get a fair shot. I think that's a fact that we all have to face. And I believe that for it to work, it needs to be very different. I'll speak now as a business person, first in how business people relate to it, that this is not the enemy showing up with some existential risk. This is not a third party. In tech, we always talk about talent, talent, talent. When talent tells us what it wants as an organized group, that's a thing we got to listen to. And so at the moment, my current belief, and then I'll shut up because I know I've gone on a rant here and you can interrupt with all questions, is we are likely to have much more and we probably need much different, which when I talk to labor

leaders, they usually acknowledge this, the leaders do, more and different labor organizing in the U.S. The business people agree it should be different, but not necessarily more. Many labor people agree it should be more, but not necessarily different. And that's the synthesis, the collision that we're going to have to navigate as a society and economy. A terrific setup. So I want to talk a little bit about the more and then the different, and then we can discuss what type of technology opportunity there is to serve more and different. So first of all, you say more. these conditions that you're talking about of like workers trying to get their voice out there trying to find some way to make it work, that's not new. That's happened. So why specifically

now more? Well, I guess I'd say it's a threshold question. It's like, well, the heat's been under the water for a long time. Why did it just start to boil now? It's like, well, sometimes enough is enough. And again, I think there is this process I went through of trial and error to try to figure solutions. I used to think the free market could have the solutions. Training, I was very early in the learn to code movement. I think these things are important, but I don't think there's solutions. I was in the government like, hey, we should look at UBI and all that stuff, but you can't get that without an electorate. And so I think it is basically just enough as enough is the reason. That's my best reason. Right. But why is what are you seeing that makes it

seem like enough is enough now. Because if this is going to be a thesis for you, it is a thesis for you, the compelling event is super important. That's why I'm trying to drill down on it. Yeah, it's a really good question. I guess I don't think it's like, oh my gosh, we've hit a 90-degree turn at this moment, and the light switch was flipped off and now it'll be flipped on. I think it's more like the conditions have been there all along. People have been trying all along, and now they're experimenting and trying something new. And examples matter. And so the example of Starbucks, I think matters a lot to inspiring other action. I think the example of organizing at the tech companies matters a lot.

I think Amazon Labor Union matters a lot because now we have live examples that are getting propagated. You have media companies like more perfect union out there telling these stories. And so I've spent a lot of time with labor organizers over the last couple of years. You know, I went to labor notes, which is the big conference of 4,000 people. You know, I've done a bunch of private events. And I just, I don't know what to tell you other than like, why is. I used to work in the media industry, and you'd have these cultural trends that would sweep through Hollywood.

And it's like, why is this year the year when such and such kind of reality show happens? That's a trivial example. Sometimes it's just in the air. And that's the best I can describe is there is this kinetic, powerful, pragmatic, motivated, fierce energy among people who are doing labor organizing. and it is a force of nature that I think the rest of us would do well to understand and respect. Let's talk a little bit more about more before we go to different. You mentioned Starbucks, Amazon, Apple. Obviously, for this to be real movement, it needs to be something that maybe is inspired by those examples but takes hold everywhere else.

That's right. So are you seeing this, you know, of course we have these like high profile examples, but are you seeing the substantial middle underneath them as well? Yeah, I mean, we are seeing experiments all over the place. I mean, you know, I was aware of like a new small union formed in a right-to-work state. So I think we're seeing experimentation everywhere, but despite what some others have said about like organizing it is at an all-time high, in the data, so far what we really see that has survived like a few years worth of ups and downs is just that sentiment is really high, meaning American public and particularly young people are supportive.

of unions at a higher rate than they've been, I think, since the 60s, something like that. So that's what we see right now in the data. But will we definitely have more? No, we will not definitely have more. A lot of that depends, by the way, on companies and how they respond to it. And one of my tasks has been to meet with business leaders who are, and maybe this will transition us into different. Because I don't think I have a satisfying answer for why more.

I mean, it's sort of like, why is it windier today than it was yesterday? I mean, confluence of forces. I don't really know. I'm just observing what I'm seeing. For business leaders, I think one of the tasks is to try to understand this. I mean, I don't know about you and your college experience or if you went to journalism school or something like that. But I actually, yeah, I studied labor relations in school.

I didn't know that. I'm humiliated that I didn't know that at Cornell or somewhere else. At Cornell, yeah. Yeah. So you know, you can correct me on this. But I got through a college education, a graduate school education and economics. And I can't remember ever hearing the word union in class. maybe once in an economics class around an example of what they would call deadweight loss

of shifting, you know, the supply curve for something. And so the first task is just a task of understanding. And I can't tell you how many examples of ignorant idiocy I've seen. Like I was on stage with a person from SEIU got introduced by a journalist as the head of SEUI, which is a huge, like, and you know, when Chris Smalls came and spoke at a conference, a business leader came up to him, and I just overheard the conversation. He was like, Chris Smalls, Christian Smalls is the head of the Amazon Labor Union. He said, explain to me about Amazon Labor Unit.

He said, you got Amazon Prime, you got Amazon Fresh. How does Amazon Labor Union fit in? And you could see that Chris was like, and I had to kind of lean over an interview and be like, no, no, no, Amazon labor union is not like a business line of Amazon. He's like, well, then how do they have the right to use the Amazon name? And I was like, oh, my God, like this is like basic American labor construct. And so I think the first task is just a task of understanding. You had it at ILR, but not everybody has that.

Yeah, I'd love to hear your perspective on what the different form of organizing might be than the traditional union, if that's the direction you're pointing in. And when it comes to like what workers ask for, like traditionally the union asks for, you know, better wages, more time off and health care. So maybe better working conditions. So is there not only like a different way of organizing, but a different ask? Yeah, I think that yes, to all of those questions. So let me again start with grounding in like, I'm a business leader. I've got this group that we've been forming with the Aspen Institute that's called the Aspen Business Roundtable on Organized Labor, which is a group of business leaders who are interested in just reexamining how business ought to relate to labor. And so what it starts with for me is how do business leaders respond to this differently?

because it's not just, it's a two-way street, everything. And the business leader response has been union busting, almost exclusively. And to be fair, I mean, I teach at Berkeley. You can't find a business school course about how to deal with organized labor as a business leader. And so I'm going to teach what I think is kind of the first course of its kind that I can find across the country. MIT Sloan and Tom Koch in there has done years of great work on this. Obviously, ILR has tons of stuff at Cornell, Rutgers. There are plenty of places where this is studied.

But I believe that we just need to start with assuming that it may not be some cataclysmic awful event if workers want to express themselves collectively and learning how to manage it. You know, if you're a CEO and a hundred of your people, I'll just give you a more pedestrian example, a hundred of your people come to you having signed a petition, an internal petition, you don't have any preparation from business school or whatever else you learned about how to do that. These are the crises that matter. So the first thing is reexamining how business relates to organized labor. And I believe that there are many opportunities where there could be win-wins, where labor unions and organized labor could be good for business. I think about as a CEO, things like trying to figure out what health care package to offer to employees, I would have loved to just hand that over to a democratically elected organization of workers and have them say, you pick which health care you want. Or I would have loved when we're trying to roll out some new policy to say, ask their elected representatives, what do you think, and work it out with them? So I could see ways, and I'm not a polliana.

I don't think like all the solutions are win-win, but I do think if we want, if we need labor organization, which I think we probably do, I think it's probably necessary, then it probably has to be good for the health of American business generally. I'm focused on the U.S. here because otherwise, if the parasite kills the host, then the parasite dies too. And so there's this business side of it. On the labor side of it, what I'll just say is I am a believer, as a matter of philosophy and approach

and experimentation of all the tools. So you have nonprofits doing innovative things. You have folks like Jobs with Justice and Organization United for Respect and lots of National Domestic Workers' Alliance. You have unions trying new stuff. You have SEIU's been trying to innovate and grow for a long time. CWA, AFL, CIO has new leadership.

You know, everybody's trying new stuff, and I'm a deep believer in that because I think we just need the data on what works. And one of the sad things about unions in the United States is how few new unions we have. We have fewer as near as I can tell from the data, fewer than 20, maybe even fewer than 15 new unions per year on average in the U.S. Not a new local chapter of a new union, but a brand new union.

And the startup person who says, well, if you want innovation, you need new entrance. You need the contest between those new entrants. And, you know, look, I'm not, we can talk about some of the business opportunities here. I know we want to get into that. I'm not a belief. Every form of experimentation has its strings attached. You know, nonprofits have their strings attached from their funders. Business experimentation has the strings attached from the sources of capital. And so it's all complicated, but really what we need now is just trial and error. Yeah. So I definitely want to leave at least 10 minutes for the different tech

that is interesting to you and companies you've invested in. But could you like quickly rapid fire before we get into that, the different, you know, you talk about different approaches. What are some different approaches? Yeah, so some of them are non-union approaches. So you look at some groups that have just created a lot of Facebook groups of people who work for a company and they just start talking to each other. I mean, at a lot of companies, one horrible consequence of inequality is our inability to relate to each other's experiences.

And so I think for a lot of folks who work in jobs like yours, mine, you know, imagine just how isolating the experience of being in a role at some of these companies, like a working class role, let's say can be, is just difficult to imagine. I mean, there are companies where you can't access your health care benefits information unless you're in the office, in the same room as a manager. Like, that kind of stuff is pretty terrible. And so some of it is just new communication channels. Some of it is legislative advocacy.

We've certainly seen that in California. with all the gig worker-related legislation that folks have tried to pass. Some of it is a big thing in the labor movement now is independent labor unions, by which they mean small unions that are unaffiliated with one of the major unions. So Amazon labor union is a good example of an independent labor union. And then some of it is just trying to go into new industries. And you see unions like News Guild have been active in organizing folks in the media industry, for example. So those are a handful of the different kinds of approaches.

You know, there's also been political advocacy around the fight for 15. You know, there's been the attempt to organize people who are not necessarily W-2s. And so meaning if you're not a W-2 employee under U.S. law, you cannot be in a labor union. And so there's a few carve-outs, but basically that's true. And, you know, and by the way, I also just add, managers can't be in a labor union. And if you're a junior manager at Amazon, you probably have more in common with the people who work for you than with Jeff Bezos. But, you know, so those are a few of the kinds of things that are happening.

And we can talk about the tech side in a second. Great. Yeah. So what are you investing in to enable this? And VCs also, like, always look for these, like, big returns. So what makes you believe that the tech that you're investing in is going to, you know, lead to big returns? If you don't mind, I'd love to start with some of the stuff we're not invested in that

just inspires me that there's possibility because there is tech stuff that's nonprofit tech stuff. You know, if you look at coworker.org, you know, they had. somebody from change.org is one of their co-founders. They have all these tools that you can use to educate yourself about how to organize. They have like, basically it's, I don't want to mischaracterize it, but it's something like a petition platform that is software. Then you have things that weren't intended for labor organizing, but are just used like crazy by labor organizers. Signal is one example. Discord. Slack. I mean, all these employee communication tools create communication among

employees, which is that's a major fundamental building block in labor organizing. As far as where we're investing, caveats first yet again, which is I get that there can be a deep potential conflict between an investor like me who wants to see, as you said, an enormous financial return. And I'm not running a charity. I'm doing this because I believe that we can be successful as business people by doing it, and the interests and class interests of working class people who have traditionally been exploited by investment. And I'm not going to sit here and say, oh, well, not all VCs and something is different. There is inherent conflict in there. And to me, one of the critical lessons, actually, that I've learned from the labor movement is what is solidarity? Solidarity is

not kumbaya of lots of people come together. It's people with violently opposed ways of looking at the world, sometimes who hate each other. This author, Vanessa Veselka, said something like this. And I think she may have said it in New York Times op-ed piece she wrote or somewhere. It's like, it's people who hate each other coming together for common cause. And so that's okay. Like I am all for real politic on this stuff, where we believe that there is opportunity, and I'll talk about some of how those conflicts might be resolved, is basically in services

that give working people the things that they want. And what they want is more pay and more say. I mean, broadly speaking, you asked, you know, how is it changed? in terms of what working people want, you know, more pay and more say. And the more say part has expressed in new ways. It used to express, and I'll get to specifics in a second, but it used to express in what they called co-determination. So what they call, co-determination is when, you know, a labor group can participate in the managerial and strategic decisions of the firm. That was actually in the U.S., the template for modern W-2 work was really signed by UAW.

with General Motors in what was called the Treaty of Detroit. And in the Treaty of Detroit, workers got things like, you know, steady annual raises, retirement, health care benefits, in exchange for giving up co-determination. And, you know, now workers are asking for that. They're also, by the way, interested in the social stances their companies take. And all the companies are like, I don't want to do this. I don't want to be bullied by my employees into taking social stances.

My basic view on that is that companies have been for years saying to their people, bring your whole self to work, they give you clothes that have the company logo on it. They want it to be your identity beyond just, you know, the time that you are clocked in or at your computer or something like that. And a consequence of that is people are going to say, okay, I want the company to reflect my views. And so then we're going to have to have hard conversations at work about that. So that's some of what I see workers wanting, but again, it's really not for me to say. That's for the worker organizations to say themselves.

And I think we genuinely have an experiment in small-scale democracy happening here of like when workers want to organize at a workplace, what do they want to say? Not what is the union rep, you know, informing them on, but what do they want to say? Right. So we have like basically four minutes left. Let me do it. Let's get like three different companies you've invested in. and what they do. Yeah, yeah, I'm going to do it. So now the conclusion, I'll give you one example of a company is Open Collective.

Open Collective allows you to host an organization without having to incorporate, allows you to manage things like the finances that organization transparently. And people use it for lots of things. They use it for funding open source software projects. But they also use it. By the way, there's a whole unity between all this labor organizing and ways of doing software. But they also use it for things like mutual aid, which is like, hey, workers, let's pool all our money together in this place.

And if one of us gets in trouble, the rest of us will bail them out, you know, that kind of thing. Another example is we invest in a company called Unit that works with workers to support them informing an independent labor union. And so these kinds of tools, I think we want to continue to see.

I'd love to see a thousand more founders take on these things. So those are a couple of examples, and I'd love to see more. Yeah, how about one more? I got two. Okay. Okay. And when did you start funding those companies? You know, there wasn't a day. I don't remember the exact year, but it's been gradually over the last few years.

And part of it is, I don't want, there are many companies like Discord that benefit work organizing. I'm not a investor in Discord. Right. But labeling them as doing this, it's so charged right now. I mean, it's crazy how charged it is. Hey, Roy, I saw you said something positive about labor unions. You're freaking me out. And it's like, uh, I mean, like what? Yeah. Yeah, it's interesting. I mean, so obviously, I spent my undergrad studying labor unions and came out with a realistic, but, you know, largely favorable opinion of them, the fact that we need them. And I've seen some of their, you know, I feel like I've seen, you know, some of their action in real life, working in politics, you know, seeing complexity. Yeah, seeing this at the BuzzFeed when BuzzFeed unionized. And I was, you know, there throughout the drive.

And yeah, I think every single person I know who's been through it says something like, says something like it might have been necessary. It could be good. It was also awful. And that's what we got to figure out. That is the task to all of us. Yeah. And I think just to close like this idea that there's something going wrong in the country when people don't, people can work their buds off and feel like, you know, they can't provide for their family. And that's got to be fixed one way.

the other. And maybe it's unions, maybe it's legislation. And let me just pick on that for a second. Which is you said, that's got to be fixed, which is passive voice. What I would say is the people suffering from that are taking action to fix that and how that action expresses itself and what we all do. I'm

not a person who personally has suffered from that. There been times in my life I've been unemployed. My parents are immigrants to this country. You know, we came with no money, but we had community and like all kinds of other benefits. Obviously, I'm white. You know, like lots of benefits. But people are going to take action. It's not the weather, people are going to take action.

That's right. Roy Bahat, thank you so much for joining. Great having you, as always. Amazing questions. Thank you. Thank you. I wish we could do this for another couple hours. Maybe we do it again sometime soon. Thanks everybody for listening. Thank you, Nick Gwattany for handling the audio thing. Thank you, LinkedIn, as always, for having me as part of your podcast network. Thank you, listeners. Great having you every week. As always, Ryan Peterson will be here. CEO, founder of Flexport, one of Roy's early investments. Don't miss it. You'll be here next Wednesday, and we hope to see you next time on Big Technology Podcast.