Universal Basic Equity
This post is, as yet, only the start of a much deeper line of inquiry. It’s something I have been researching and thinking about the last two years. I will return to this post periodically and flush it out. But it is time I at least put a flag in the ground.
This is me on the cover of Wired in the summer of 1999. The most important word here is “equity.” Silicon Valley’s primary way of unlocking innovation value was giving the employees equity. When employees could own the upside, and were on a vesting schedule that locked them in for a few years, they dared to try things, and worked harder at it, than if they were simply paid income.
About five years after that, Internet 2.0 released the power of platforms that had users generate the content, insight, and value. And in so doing, it kind of distracted us from that older part of the Silicon Valley engine, even if it was still fully operant. Today, the art of entrepreneurship is far more granular than just holding options; entrepreneurs take in cash between pricing rounds with SAFEs, and try to resist investor demands for liquidity preference and most-favored nation status, all to avoid dilution and maintain control of their company. They take heat when they top up the ESOP, but any good entrepreneur knows the ESOP is necessary for hiring and keeping great talent. Equity — upside — continues to be the most important piece of value creation across a wide variety of technologies being reinvented by Silicon Valley.
So, it’s just a little off-key that Silicon Valley is becoming an incubator of the movement for Universal Basic Income — as a future solution to employment displacement when robots and artificial intelligence decimate labor markets. Not equity. Income.
I am not trying to be critical. I laud the vision and the effort put into pilot experiments with UBI around the world. But as a futurist, when I try to envision UBI actually becoming national policy, I see huge social clashes, disinformation tactics around Big Government, and both consumer and corporate rebellion. I see marches in the streets, boycotts, offshoring, and billionaires called to Washington for interrogation. I keep wondering if we need more imagination.
We’re headed towards a world where those who own the best robots, and the best automation systems, end up with a lion’s share of the money. Anytime there are network effects in an industry, it becomes a winner-takes-all economy. I’m glad we have so many tech leaders willing to give back so much of their earned income to benefit society. But I have to wonder: what if, instead of giving back a share of their income, they instead gave consumers a share of the robots?
This is where the Big Disclaimer comes in. I am not proposing Amazon, or any other company, actually do this particular idea. The idea has obvious flaws; it’s useless in business-to-business markets, and even in consumer markets, equity dividends won’t offset or placate people who lose their job and way of life. I only want you to think about it. It’s merely one mechanism, among many, that fall under the conceptual umbrella of Universal Basic Equity. We have about a decade before the displacement really starts to throw people’s lives into disarray. Micro-transactions, thin slices, blockchain fractional ownership — they’re all likely part of the solution. My general sense is that Silicon Valley is not being inventive enough in saying “we know displacement is coming, so the government should give everyone a basic income.” We do need to protect entrepreneurial upside –without it, innovation vanishes. And to grow, startups need real capital, not just Kickstarter advances from future customers. But our economic system needs to find other ways to reduce the polarization into haves and have-nots.
Wallet activism can be extremely powerful. Normally, the energy is not focused; we disperse our power across so many good issues we’re concerned with. Ocean preservation, microplastics, renewable energy, #metoo and Times Up, equal pay, LGBT rights, animal welfare, political party affiliation, country of origin, sustainable wages. The punching power of a single individual is increasing, but it’s possible that job displacement policies will just become one more thing that makes our priority list even longer. It’s also possible that new jobs will emerge fast enough that the displacement isn’t so severe, and so we don’t end up in a cultural war. Right now, truck drivers are heavily in demand because the volume of shipping has increased so much. Right now, grocery stores can barely hire enough stocking clerks. Retail has millions of jobs unfilled. Winery vineyards have to bring in grape-picking robots, because there aren’t enough seasonal workers to hire. We’re sitting in a lull, enjoying near-full employment, making it all too easy to not think about what’s coming. To some extent, this is temporarily useful: we can somewhat focus on equal treatment and the environment. But I worry.
A century and a half ago, the Gilded Age brought the fastest economic growth in history, but also created extreme income inequality. Unions emerged; corporations bonded together in trusts to fight back. Labor strikes were violent. Company towns paid in company scrip that could only be spent in the company store. Conflict escalated until the Progressive Era brought reforms. Today’s corporate leaders don’t want society to unravel like that again. They want their business to benefit society. They want customers to like them, not hate them. But they need a more robust toolkit.
Right now, corporations run two sets of books, in a sense. One uses the traditional financial measuring sticks required by investors — i.e., owners. The second uses the neotraditional KPIs that quantify the customer — repeat visits, customer acquisition costs, click-through rates, mileage points, scrolling behavior metrics, net promoter scores, even emotional microexpression readings. In theory, the second informs the first, and maybe it’s fair to say the second set of books drives growth, while the first set of books pegs margin. “Our customers are our evangelists,” is the common wisdom. “They’re our best salespeople.”
And no doubt, we are entering an era where alternative currencies are expected to hybridize into real currency as the next generation takes over. I’m not talking crypto necessarily — the same way I swapped lunches at school as a child, the next generation was raised to think very flexibly about what constitutes cabbage. The currency of mid-childhood is “screen time,” dispensed by parents in moderation much like the Federal Reserve sells T-bills to loosen the money supply. Monthly data limits are the currency of pre-teens; so are Spotify Premium logins, and HBO passwords. Video game “coins” and barely-worn sneakers convert to cash in secondary online markets. In microtransaction tipping, they’re inventing the mother of all exchange rates, the normative value, in dollars, of human actions that make us feel good.
It’s only a slight logical leap to imagine an economic model evolving that blends the customer and the owner into a single set of books. A 3-dimensional P/L. Where the customer and the owner are on a single spectrum, with many who are both.
Gen Z is doing more than killing cash. Gen Z is killing malls. They’re killing magazines. They’re not just going to kill cable bundling — they’re going to kill the very concept of a television channel. They don’t want the channel, they just want the show. They’re way smarter and more resourceful than any anthropologist gives them credit for. I don’t see them blindly getting into driverless Ubers, without some serious investigation into where the jobs will come from. I don’t see them blindly giving Jeff Bezos every penny, on the hope he’s going to give them a monthly stipend of Amazon Bucks if they run out. The reckoning is coming; policies and standards for labor displacement need to be in place.